Hospital leaders say they're moving ahead with delivery-system reforms that keep their populations healthy now that the U.S. Supreme Court has removed uncertainty about the continuation of premium subsidies. They hope the subsidies ruling will clear the way for more states to expand Medicaid to low-income adults.
Healthcare investors also cheered the King v. Burwell decision, sending shares of companies such as Community Health Systems and Tenet Healthcare Corp. as much as 14% higher on the day that the court issued its opinion.
“It's very positive for the industry,” said Alan Miller, CEO of Universal Health Services, a publicly traded chain with acute-care and behavioral-health hospitals in 37 states. “It's good for reduction in bad debt. We'll get paid for our services.”
The court's decision in King means that insurance will remain affordable for 6.4 million Americans in 34 states and that hospitals will have a payment source for many previously uninsured patients. Some healthcare leaders predicted the ruling would weaken Republican efforts to roll back the Affordable Care Act. If the court had killed the subsidies, they say, it would have strengthened further attacks on the law.
“A negative ruling would have been very disruptive,” said Dr. Bruce Vanderhoff, chief medical officer of OhioHealth, Columbus. “It would have been a lot like pulling a thread in a garment. You just don't know what will happen if you pull that thread.”
In Ohio, 234,000 people bought health insurance through the federal exchange and 196,000 of them got a subsidy. “The court's ruling allows for stability,” Vanderhoff said. “What it signals is a continued evolution to value-based care rather than fits and starts.”
Trinity Health, based in Livonia, Mich., estimates that 3.8 million people were at risk of losing coverage in the 21 states where it operates. Trinity has an ambitious plan to expand into new value-based payment models. In 2013, the system hired Dr. Richard Gilfillan, the Obama administration's architect of accountable care organizations, as its new CEO.
“The No. 1 impact (of the King ruling) for us is that those people who want to get care can continue getting care,” said Gilfillan, who formerly headed the CMS Innovation Center, which was created by the healthcare reform law. “It maintains momentum around transforming our healthcare system.”
At health systems across the country, executives emphasized that the ruling will allow them to focus on providing people with urgent and preventive care before they end up in the emergency room or the hospital. “It's critically important to population health,” said Bill Carpenter, CEO of publicly traded LifePoint Health, based in Brentwood, Tenn. Most of its 64 hospitals are small, rural facilities. “We are grateful that those people who bought affordable health insurance through exchanges will continue to have coverage.”
In Texas, the uninsured rate has fallen to 16.9% from 24.6% since the ACA coverage expansion took effect, despite the state's refusal to expand Medicaid to low-income adults. “For each 1% of our business that moves from being uninsured to being insured via the marketplace, we realize approximately $40 million,” said Joel Allison, CEO of Baylor Scott & White Health in Dallas. “That is money that we, as Texas' largest not-for-profit healthcare provider, can reinvest in the health of the communities we serve, expanding access to quality care for the uninsured and the underinsured.”
Notably, the justices not only upheld the Obama administration's interpretation that the ACA unambiguously authorizes premium subsidies in all states, but they blocked future administrations from interpreting the law differently and shutting off subsidies in states served by the federal marketplace.