If there is anxiety over how the U.S. Supreme Court will rule in King v. Burwell, it appears that there are few concerns about how the decision will impact the hospital sector.
The stocks of publicly traded hospital systems rose significantly after Wednesday's oral arguments, according to MarketWatch.
Shares of HCA Inc., Tenet Healthcare Corp. and Community Health Systems were up more than 4 percent on Wednesday, according to MarketWatch. LifePoint Hospitals and Universal Health Services were 3 percent and 2 percent, respectively.
King v. Burwell will determine whether premium subsidies will remain in place in at least 34 states that allow the federal government to operate an exchange on their behalf. Should the high court strike down subsidies, millions of people could see their premiums skyrocket.
Case observers apparently saw a favorable swing toward keeping the subsidies in place due to skeptical questioning of the plaintiffs' argument by Associate Justice Anthony Kennedy, who is considered a potential swing vote in how the Supreme Court will decide the case, MarketWatch reported.
"Justices Scalia, Thomas and Alito are highly likely to vote to reverse, believing that, at best, it is the job of Congress, not the Court, to fix a defective legislative regime," Stuart M. Gerson, an attorney with Epstein Becker Green, told Healthcare Finance News. By contrast, the more liberal wing of the court will likely preserve the subsidies as they currently stand.
Hospitals, particularly those of the for-profit variety, have benefited tremendously from the Affordable Care Act. Tenet, for example, just reported its biggest pre-tax earnings in more than a decade. Other hospital operators have reaped gains as the rate of self-pay and charity care patients declined.
However, even if the high court rules against subsidies, some hospital executives, such as Allen Miller of Universal Health Services, believe Congress will create a workaround, FierceHealthcare reported.