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January 12, 2015 12:00 AM

HCA boosts insurance exchange contracts 37%, reaffirms outlook

Bob Herman
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    Johnson

    Publicly traded hospital chain HCA has increased the number of payers it contracts with in the federal insurance exchanges this year despite the U.S. Supreme Court question mark overhanging premium subsidies on those exchanges.

    HCA's exchange contracts are up 37% for 2015, HCA CEO Milton Johnson told investors at the J.P. Morgan Healthcare Conference in San Francisco. Most notably, HCA has added UnitedHealthcare in Texas. And in Florida, HCA hospitals plan to accept exchange patients from Aetna, Humana and UnitedHealthcare.

    “We're very excited about our position in exchanges for 2015,” Johnson said.

    However, the Supreme Court will decide the fate of federal exchange subsidies later this summer. In King v. Burwell, justices will rule whether the tax credits people receive through the 34 states that fully use HealthCare.gov are legal. Opponents have said the Patient Protection and Affordable Care Act only allows for those subsidies to be issued through exchanges “established by the state.” But reform advocates have argued the intent is for all people, regardless of the exchange's status, to receive subsidies.

    If the subsidies are struck down, many observers believe the reform law will be severely injured. And the individual market could be thrown into disarray, as many would drop coverage without subsidies because they find coverage to be unaffordable. A report from the RAND Corp. recently estimated up to 10 million people would drop their insurance.

    This could be especially problematic for hospital chains like HCA. If paying patients lost exchange coverage, HCA could lose up to 3.5% of its earnings before interest, taxes, depreciation and amortization. However, Johnson did not weigh in on the Supreme Court case in his talk.

    However, Justin Lake, an analyst at J.P. Morgan Securities, said in a note Monday that he met with HCA's management team and they are “still optimistic on workarounds if necessary.” They also noted that big business groups such as state and national chambers of commerce “have not come out in support of the plaintiffs,” Lake said.

    Johnson reaffirmed HCA's fourth-quarter financial projections, released late last week. The company's adjusted earnings before taxes and other scheduled charges will likely come in at roughly $7.4 billion, up slightly from previous guidance.

    HCA, based in Nashville and the largest for-profit hospital company by revenue, will give full-year 2015 projections when it releases quarterly earnings Feb. 3.

    Follow Bob Herman on Twitter: @MHbherman

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        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
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      • Podcast - Beyond the Byline
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