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 The high court heard oral arguments in the case challenging the
federal tax credits that help residents in at least 34 states afford
medical benefits under President Barack Obama's healthcare law.
Investors interpreted commentary by Justice Anthony Kennedy, a
potential swing vote among the nine judges, as favorable to the
Obama administration's defense, boosting hospital shares.
Since the subsidies were introduced last year, they have helped
hospitals reduce the debt accumulated by covering the costs of
uninsured patients.
If the subsidies are deemed illegal for states that rely on the
federal HealthCare.gov insurance exchange, as many as 8 million
people may no longer be able to afford coverage, according to
healthcare consultants. An additional 13 states and the District of
Columbia have set up their own exchanges and would not be affected.
"I am hopeful that the court will recognize and uphold the intent of
Congress, which was to expand coverage as broadly as possible," Bill
Carpenter, chief executive of LifePoint Hospitals, said in an
interview.
If the court rules that the federal government cannot provide the
subsidies, Carpenter and other executives interviewed by Reuters
said they expected the justices would allow for a transition period
before patients lose access to healthcare.
Carpenter said LifePoint is talking to members of Congress from the
21 states where it has hospitals, warning of the devastating effect
on patients, particularly in the rural areas it serves. A ruling on
subsidies would affect 44 of its 65 hospitals in 13 states.
Alan Miller, CEO of hospital chain Universal Health Services,
expects the Obama administration would reach an agreement with
Republican opponents of the law to keep subsidies in place through
the end of 2015. He believes that is enough time to create a
workaround to the Supreme Court ruling.
"The Republicans are already talking about providing coverage until
the end of the year, until something else can be worked out," Miller
said, pointing toward the alternative plan being presented by
Republican Sen. Orrin Hatch and others. "Nobody wants to be in the
position of denying healthcare to at least 8 million people."
Miller said his company was also speaking with members of Congress
about the importance of the coverage. Universal Health Services runs
hospitals in 37 states, about two dozen of them in states relying on
HealthCare.gov.
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Carolinas HealthCare System has about 40 hospitals in North Carolina
and South Carolina, where the federal government provides subsidies.
President Joe Piemont said lawmakers would have to act to ensure the
newly insured are not left to their own devices if the subsidies are
thrown out.
"We won't let the care fall apart, but this is not an uncertainty
that we could endure for a very long time," he said. "We're going to
lobby through hospital associations and medical associations to
admonish everybody that there needs to be a soft landing here."
Ascension Health, which has hospitals and clinics in 16 states using
HealthCare.gov, has published opinion pieces in the press advocating
the need for the subsidies. But it sees little it can do to
influence the Supreme Court.
"We are not planning for alternatives because we remain optimistic
and hopeful," said Ascension Health CEO Robert Henkel.
Universal Health shares rose 2.7 percent and LifePoint rose 3.6
percent on Wednesday. Community Health Systems, HCA Holdings and
Tenet Healthcare all jumped more than 5 percent. Graphic link:
(http://reut.rs/1zYuW3f)
(Additional reporting by Sharon Begley in New York; Editing by David
Gregorio; Editing by Michele Gershberg)
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