Adverse subsidy ruling in King v. Burwell could damage hospital bottom lines

An adverse ruling against premium subsidies by the U.S. Supreme Court in the King v. Burwell case could nip at hospital finances in 34 states, the McClatchy News Service reported.

A ruling in favor of the plaintiffs would bar residents in states that do not operate their own health insurance exchanges from claiming subsidized premiums if their incomes fall within certain guidelines. The subsidies of millions of Americans are at stake.

Recent studies show as many as 9.6 million Americans would drop unsubsidized coverage because they could not afford their premiums and that premiums would rise by more than a third.

Big for-profit chains such as HCA, Inc. are at risk of losing as many as 4.9 million covered lives in 15 states where it owns hospitals, likely driving up its uncompensated care costs and digging into its bottom line, according to McClatchy. In an amicus brief filed with the high court, HCA said patients with subsidized coverage paid an average of $390 in out-of-pocket expenses when they visited an HCA facility. Nine out of 10 uninsured patients paid nothing.  

And HCA's uninsured patients are far less likely to seek preventive care and far more likely to be treated in hospital emergency rooms, according to the amicus brief.

But rural hospitals are at risk as well. "It's kind of a perfect storm of all things bad," Jimmy Lewis, CEO of HomeTown Health LLC, a trade association of some four dozen rural hospitals in Georgia and Florida, told McClatchy. "Anything that increases the uninsured puts rural hospital providers at an even greater risk for distress or closure."

Rural hospitals also face cuts in the Disproportionate Share Hospital funds and Medicare payments as part of the Affordable Care Act, as well as the fact that they operate in many states that have declined to expand Medicaid eligibility.

Meanwhile, the stocks of publicly-traded hospitals rose after oral arguments in the King v. Burwell case took place earlier this month. And The Hill has reported that the subsidies are likely to survive legal scrutiny.

To learn more:
- read the McClatchy article 
- check out The Hill article 
- here's HCA's amicus brief (.pdf)

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