If Supreme Court strikes subsidies, health system profits would likely take a small hit

A Supreme Court decision to invalidate premium tax credits for millions of Americans under the Patient Protection and Affordable Care Act could have an impact health system profits. However, if traditional federal funding to health systems persists, analysts say it may not be as big a hit as some might expect, according to CNBC.

"Although hospitals have been benefiting from the Affordable Care Act, it's been much more weighted to Medicaid expansion," said Megan Neuberger, managing director and corporate healthcare credit analyst at Fitch Ratings, according to the report.

Ms. Neuberger and many other analysts say Medicaid expansion has been a more significant factor for reducing bad debt than the federal insurance subsidies currently in question in the Supreme Court case King v. Burwell, in which a decision is expected by the end of this month. If the court rules in favor of King, about 6.4 million individuals in 34 states will lose the subsidies they've obtained through the federal insurance exchange HealthCare.gov.

Hospitals and health systems would likely see a 2 to 3 percent negative impact on cash flow, but the government will likely act to mitigate the impact of the ruling, according to the report. According to Ms. Neuberger, hospitals have adjusted to cuts in reimbursement and shifting payment models that have resulted from the PPACA, and are largely benefiting from the rebound economy following the Great Recession.

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