King v. Burwell: What the Supreme Court decision will mean for providers

As the industry awaits the Supreme Court's decision on King v. Burwell, providers need to develop contingency plans in case the court rules that subsidies for health insurances are limited to residents of the 13 states and the District of Columbia that established their own facilities and exclude those who live in the 37 states that purchased insurance via the federal exchanges.

Hospital executives should prepare for three outcomes, said Joseph Swedish, president and CEO of Anthem Inc., pictured right, one of the panelists at Tuesday's federal forum closing plenary session at the American Hospital Association's annual meeting. Either the court will rule the subsidies are legal, they are illegal but there is flexibility, or they are legal and there is no flexibility.

Regardless of the outcome, he said, providers must be ready to adapt to the decision, and it won't be easy.

"We have arrived as a society. We are now taking care of a lot more people and the quality of care is much better," he said, noting the difficulty the Supreme Court ruling could create if those newly insured consumers no longer have the subsidies to pay for insurance and no longer have access to the newly acquired healthcare services. "This is a knot that we have to untangle and put it back together."

Michael Leavitt, former secretary of the Department of Health and Human Services, said hospital executives need to consider policies on how to treat people if they lose coverage but continue to seek services from the organization.

None of the panelists, including Julie Rovner, senior correspondent for Kaiser Health News, would predict how the Supreme Court will rule in the case. But Leavitt said the case is not clear cut.

"It's not open and shut," he said, as the justices must consider the strict construction of the law versus its intent.

While lawmakers respond to the eventual decision, Leavitt (pictured left) said it's the governors of the states that relied on to enroll residents who will truly feel the heat. "The pressure goes to the governors must deal with millions who had overage and now worry that they will lose it," he said.

Swedish noted that, from a hospital perspective, the case has been "amazing to watch." The subsidies available through the Affordable Care Act have created stability in the market, bad debt and charity care statistics have improved in states that expanded Medicaid. Anthem, he said, enrolled 900,000 people, the majority of whom never had insurance before. "How will they get cast during a disruption? There is a very clear risk to the memberships and the gaps in care will accelerate, uncertainty in the market will accelerate, it will create serious headwinds."

Leavitt said, that if the plaintiffs prevail, states will have three options to make sure residents continue to have coverage. They will have to create a state exchange quickly, they could rent it from the government or states could join together to share an exchange.

"My view is, every state should be thinking about it and if you have a state exchange think about how you may be called upon to help," he said. "The federal government claims it has not given any thought to it. I hope that's not true."