Healthcare spending would decrease by at least $9.7 billion in 2016 and by more than $100 billion over a decade if the U.S. Supreme Court strikes down subsidies in the 34 states that haven't established their own insurance exchanges, according to an analysis by researchers at the Urban Institute.
“This Supreme Court case potentially has far-reaching effects that will extend well beyond those losing coverage, and ripple through the entire industry,” said Katherine Hempstead, who directs coverage programs at the Robert Wood Johnson Foundation, which published the study, in a statement. “A decision for King will have significant financial impacts, not only for patients, but also for the healthcare delivery system that relies on these patients for revenue.”
If the Supreme Court rules in favor of the plaintiffs in King v. Burwell and finds that residents of states without their own exchanges aren't eligible for financial assistance, 8.2 million individuals would lose coverage, the study notes. That includes 6.3 million Americans who would have obtained subsidized coverage through the exchanges and 1.2 million who would have purchased exchange plans without financial assistance.
The report estimates that healthcare spending would fall from $27.1 billion in 2016 under the current coverage provisions of the Affordable Care Act to, at most, $17.4 billion if subsidies disappear. The latter figure includes $5.3 billion that residents of those states would pay out of pocket for healthcare, as well as $12 billion in uncompensated care.
Hospitals would be particularly hard hit financially. That's in part because federal funding for programs that they've historically relied on to pay for care of uninsured patients is being significantly reduced under the ACA. Most notably, Medicaid and Medicare disproportionate-share hospital payments are expected to be reduced by more than $50 billion by 2022, according to the Congressional Budget Office.
Those cuts were supposed to be offset by expanding Medicaid to households with incomes up to 138% of the federal poverty level. But 22 states currently are refusing to implement the Medicaid expansion provision of the ACA.
The Urban Institute analysis estimates that spending on hospital care by individuals losing access to subsidies would decrease by more than half. Instead of spending $11.1 billion on hospital care, those patients would spend $4.8 billion.
The financial hit to doctors is projected to be almost as steep. Spending on physician care would drop by $2.1 billion in the 34 states affected, a 47% decrease. And spending on pharmaceuticals would fall by 30%, to $3.7 billion.
The Supreme Court is scheduled to hear oral arguments on the King case next month; a ruling is expected in June.
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