The nation's largest healthcare organizations predicted a profitable 2015 at the annual J.P. Morgan Healthcare Conference in San Francisco.
This year's meeting brought together thousands of executives and analysts from more than 450 hospitals, insurers, pharmaceutical companies, devicemakers and technology firms to review the short-term and long-term prospects for the healthcare industry. King v. Burwell, which the Supreme Court will decide by the end of June, regularly came up in discussions. The high court could strike down premium tax credits offered in the 37 states using the federal insurance exchange.
If the subsidies are tossed out, many observers say the healthcare reform law will be crippled. The individual insurance market and possibly the small-group market would be thrown into disarray, with many subsidized customers dropping their plans because the premiums would become unaffordable.
That could cause premiums to spike, spurring an insurance-market death spiral. A report from the RAND Corp. estimated that up to 10 million Americans would drop their coverage. Some observers say that could jeopardize the entire law, including the Medicaid expansion to low-income adults.
But multiple executives and analysts at the conference expressed confidence that the Supreme Court would not touch the subsidies, although legal experts are far less certain. If the justices do invalidate the subsidies, those at the conference predicted congressional Republicans and the Obama administration would feel compelled to come together to pass some kind of fix—even though political experts have expressed doubts. “It's going to be very difficult to tell millions of people, 'You're uninsured again,' ” said Dr. J. Mario Molina, CEO of Molina Healthcare.
Others seemed determined to put off such concerns until the high court hands down a ruling. LifePoint Hospitals CEO Bill Carpenter said he hoped the Supreme Court won't make the “wrong decision.” He did not say whether his company had a contingency plan.
Anthem, one of the most active insurers in the exchanges, likely will go through “some scenario planning between now and the ruling,” CEO Joseph Swedish said. But he added that little time would be wasted predicting an outcome. “Speculation on where the Supreme Court is going to land is a fool's gold,” he said.
Hospitals have a lot to lose if the subsidies are invalidated. Expanded coverage has greatly stabilized revenue and lowered bad debt, not-for-profit and investor-owned health system executives said.
Justin Lake, an analyst at J.P. Morgan Securities, wrote in an investor note that he met with the management team of HCA, the largest for-profit U.S. hospital chain by revenue, and the company is “optimistic on workarounds” if the court strikes down the subsidies. Lake said HCA executives also noted that business groups such as state and national chambers of commerce have not come out in support of those legally challenging the subsidies.