Hospitals and investors are banking on the U.S. Supreme Court or the states to save premium subsidies that have made health insurance affordable for 6.4 million people in 34 states. But the stocks of publicly traded hospital companies could take a big hit if that doesn't happen.
Hospital executives are nervously anticipating the high court's imminent ruling in King v. Burwell, which could invalidate premium tax credits in up to 37 states using the federal exchange. Their preparations have varied widely, with some saying their strategy is watchful waiting. The American Hospital Association has hired consultants Manatt Health Solutions to work with state hospital associations to develop contingency plans.
Urban safety-net, rural, faith-based and academic hospitals are most likely to feel the impact, said Guy Collier, a partner at law firm McDermott Will & Emery.
Hospitals will see unpaid bills and charity care increase as lower- and middle-income patients “go back to being at financial risk without resources to take care of themselves,” said Marvin O'Quinn, chief operating officer for San Francisco-based Dignity Health system. St. Louis-based Ascension Health, which operates in 23 states and has 131 hospitals, will rely on charity care and billing policies previously in place if subsidies go away, said Anthony Tersigni, Ascension's CEO.