The health care industry is focused on how the outcome of the King vs. Burwell case at the Supreme Court will mold the near- and long-term shape of the industry.
The case, which looks at the validity of subsidies on the federal exchange, has raised currently unanswerable questions about who and how many will have access to coverage by the end of the year.
“This an issue that affects everyone it impacts. Democrats, Republicans, providers, insurers, everyone has an interest in solving this problem. No one wants to take away coverage for 6-8 million people when it’s all said and done,” Wayne Smith, chairman and CEO of Community Health Systems, said on Wednesday as moderator of a panel hosted by the Nashville Health Care Council.
Medical providers and insurance companies are awaiting an outcome because the number of people in limbo is in the millions.
“The volatility from the case is ‘hard to handicap’ because there are a number of different ways the outcome could go,” said Paula Torch, senior research analyst at Avondale Partners.
Torch pointed out that so far in the open enrollment period there are more people who qualify for subsidies nationwide than the total number who enrolled last year. There have been 7.2 million people who selected a plan or were automatically re-enrolled as of Jan. 16, according to the U.S. Department of Health and Human Services. The panelists forecast that 9-11 million people would enroll nationwide for coverage this year.
In Tennessee, 83 percent, or roughly 153,123 of the 184,486 who have enrolled as of Jan. 16, qualify for tax credits. Last year 151,352 people were covered on plans bought on the federal exchange.
Investors in the health care industry are following the chatter and commentary in the run-up to oral arguments on March 4. Darren Lehrich, managing director in the Americas company research team at Deutsche Bank, estimated that 50-60 percent of the benefits that hospital operators get from the Affordable Care Act come from patient uptick from plans bought on the exchange. And two-thirds of the states operate on the federal exchange.
Torch said that there are some investors who believe it won’t be “dire” even if the decision goes in favor of the plaintiffs, who argue that the tax credits are available only on state exchanges. Many who invest in health care and work in the industry believe states that participate on the federal exchange will move toward setting up state exchanges, according to the panel.
“It’s going to be tough for Republican leaders if it does in fact favor the King case, and I think at that point we might see some ‘fix and repair’ potentially,” said Torch.
There is some pushback to the notion of state exchanges from opponents of the ACA. For example, State Sen. Brian Kelsey, R-Germantown, has filed a bill that would make it illegal for Tennessee to set up a state exchange if the outcome of the King vs. Burwell case finds that tax credits are available only on state exchanges.
“The reason there is uncertainty at all about it, given the way the rule went last time, is because the Supreme Court jumped the appellate court and decided to hear the case early,” said A.J. Rice, managing director at UBS Financial Services, noting that the appellate courts that heard cases were supporting the subsidy the way it is structured.
“It’s all about who made the votes to bring it up, whether it was the Republican side or the Democratic side, that what’s really hard to know. Once we have some clarity it’s very analyzable.”