Supreme Court case could lead to a large decrease in hospital revenue
If the Supreme Court rules in favor of the plaintiff in the upcoming King v. Burwell case, more than 8 million people would lose their insurance coverage and healthcare spending by that population would significantly decrease, according to a recent Urban Institute report. The case will determine if the federal government can continue to offer subsidies to help pay for premiums.
Hospital spending would also decrease by at least an estimated $6.3 billion, the researchers said. They mentioned that if there were changes in financing for uncompensated care, hospital spending could be reduced by an additional $3.8 billion.
In that scenario, the researchers noted that hospitals would be negatively affected because Medicare and Medicaid disproportionate share hospital payments have been reduced since the passage of the Patient Protection and Affordable Care Act (ACA) in 2010. Hospitals have offset those reductions by having more insured people who can afford to pay for their care. However, millions of people may not be able to pay for their own care if the Supreme Court rules that tax credits cannot be used to lower costs for people obtaining insurance on federal government-run health insurance exchanges.
In this analysis, the researchers evaluated the 34 state health insurance marketplaces in which the federal government has at least some responsibility for running the exchange. The federal government is running the marketplace in 19 states and has formal or informal agreements to help with the marketplaces in 15 states.
The researchers estimated that 8.2 million people would lose insurance coverage if the Supreme Court rules tax credits cannot be used. From 2016 to 2025, this population would spend $112 billion less if they lost their tax credits, according to the analysis.
“If King v. Burwell is decided in favor of the plaintiff, not only will the additional coverage resulting from financial assistance for the purchase of marketplace-based policies be reversed, but some of those purchasing nongroup insurance fully with their own funds would become uninsured given the consequent large increase in premiums in those markets,” the researchers wrote. “Consequently, hospital revenues would decline in the affected states; the largest decreases would occur for hospitals that serve a large share of low- and moderate-income patients, but all hospitals would be affected financially in some way.”
Executive Editor
Tim Casey joined TriMed Media Group in 2015 as Executive Editor. For the previous four years, he worked as an editor and writer for HMP Communications, primarily focused on covering managed care issues and reporting from medical and health care conferences. He was also a staff reporter at the Sacramento Bee for more than four years covering professional, college and high school sports. He earned his undergraduate degree in psychology from the University of Notre Dame and his MBA degree from Georgetown University.