Join, Follow & Connect
Join Modern Healthcare's LinkedIn group Follow Modern Healthcare on Twitter Join Modern Healthcare's Facebook group Follow Modern Healthcare's Pinterest board Modern Healthcare's Flickr page Modern Healthcare's YouTube Channel Get a Modern Healthcare news feed

 
Comment Buy Reprints Print Article Share on LinkedIn Share on Facebook Share on Twitter Email this page to a colleague
Healthcare Business News
 
insurance form

Reform Update: For-profit hospitals take hit as ACA's employer mandate delayed


By Beth Kutscher
Posted: July 3, 2013 - 4:00 pm ET
Tags:

The White House's decision to delay penalties for employers that don't offer health insurance came as a blow to hospital stocks, as investors factored in less volume and more uncertainty than they had anticipated.

The largest publicly traded hospital operators took a hit ranging from 3% to 5.5% as investors digested the news that employers with more than 50 workers will now have a reprieve from penalties until 2015.

HCA ended the day trading down 3.9%, while Tenet Healthcare Corp. closed 4.3% lower and Universal Health Services, 3.5%.

The announcement, which came in a blog post yesterday evening from Assistant Treasury Secretary for Tax Policy Mark Mazur, said the one-year delay allows more time to simplify reporting requirements and adapt reporting systems.

The post was careful to stress that the employer mandate is the only provision of the healthcare law being delayed, and that employees will continue to have access to premium tax credits. Analysts similarly did not expect to see a major impact from the rule change on hospital volumes, but noted that the delay does raise questions about whether there could be more missed deadlines and delays down the road.

Advertisement | View Media Kit

 

Darren Lehrich, an analyst at Deutsche Bank, wrote in a research note that the move suggests that the administration is willing to be flexible in how it implements the Patient Protection and Affordable Care Act. That could be a good thing, he noted, if it decides to extend open enrollment to increase participation in health insurance exchanges, for instance.

On the other hand, to the extent it “calls into question implementation readiness,” other core elements of the healthcare law could also face delays, he added.

Frank Morgan, an analyst at RBC Capital Markets, attributed the stock market volatility to “near-term confusion and concerns,” especially as the delay could provide fuel for Republicans still hoping to repeal the law.

Analysts pointed out that the expanded coverage from the employer mandate was expected to be minimal since most large employers already offer health insurance as part of their benefits.

They noted that most of the upside for hospitals is likely come from other ACA provisions such as Medicaid expansion, health insurance exchanges and premium subsidies.

More complaints with employer mandate

The employer benefits industry wants the affordability test for health coverage to reflect premium discounts tied to wellness programs. The Affordable Care Act requires employers to offer health benefits at a cost that doesn't exceed 9.5% of wages or household income—the so-called employer mandate that's now pushed back to Jan. 1, 2015. Failing the affordability test could draw a penalty of as much as $3,000 for each employee who turns to the insurance exchanges for a federally subsidized plan. The Internal Revenue Service, in proposed regulations, suggested that wellness discounts should be subtracted only when tied to smoking cessation programs. As Modern Healthcare sister publication Business Insurance reports, the ERISA Industry Committee sent a letter Wednesday to the IRS arguing that the “selective recognition of wellness incentives, as proposed in these regulations, discourages the most effective and efficient use of wellness programs by those employees who would most benefit from incentives to become healthier.”

Policy changes, insurer pressure may have slowed hospital admissions

New health policy and cost pressure from public and private insurers may have helped to slow hospital admissions, said Fitch Ratings analyst Megan Neuburger, as the rating agency released a snapshot of for-profit hospitals. The report said some fundamental changes may be underway that helped slow health spending beyond the drag created by the recession and weak economy. “Persistent weakness in patient volume growth despite an improving economy in most markets is compelling evidence that hospital providers are experiencing some systemic shifts in care delivery,” the Fitch report said. Neuberger, a Fitch senior director, said another contributor to the slowdown may be insurance that requires households to pay more for medical care.

Follow Beth Kutscher on Twitter: @MHbkutscher


What do you think?

Share your opinion. Send a letter to the Editor or Post a comment below.

Post a comment

Loading Comments Loading comments...

Search ModernHealthcare.com:


 

Switch to the new Modern Healthcare Daily News app

For the best experience of ModernHealthcare.com on your iPad, switch to the new Modern Healthcare app — it's optimized for your device but there is no need to download.