Fitch: Conflicting insurance subsidy decisions lead to more risks for hospitals

 The uncertainty surrounding insurance subsidies created by conflicting decisions issued by appeals courts in Washington and Virginia could have a negative impact on hospitals, according to Fitch Ratings.

On July 22, a three-judge panel of the D.C. Circuit Court of Appeals in Washington held tax subsidies to low- and middle-income Americans may not be provided in states that use the federally-run health insurance exchanges.

Two hours after the appeals court in Washington issued its decision, a three-judge panel in a Virginia appeals court ruled individuals in any state could receive health insurance subsidies.

Fitch believes the uncertainty concerning subsidies will delay hospital management's ability to develop and implement strategic plans related to full implementation of the Patient Protection and Affordable Care Act.

The ultimate fate of the subsidies will likely be decided by the U.S. Supreme Court, and should the Supreme Court rule agree with the Washington court's opinion, financial pressure on many hospitals would likely rise, according to Fitch.

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