Healthcare News & Insights

Supreme Court rules in favor of health reform law

Here’s some good news for hospitals, particularly those that treat many Medicaid patients, or patients with healthcare exchange plans: The Supreme Court just ruled in favor of keeping federal subsidies for health insurance intact.  

american legal systemThe High Court announced its decision in King v. Burwell, a case brought before the justices in hopes of overturning President Obama’s healthcare mandate.

Originally, the case argued that, since the Affordable Care Act (ACA) mentioned state exchanges in one section of text without mentioning federal exchanges, the federal ones weren’t valid.

That meant patients in states that didn’t set up their own exchanges wouldn’t be able to get subsidies to pay for their insurance, effectively crippling the law.

But the Supreme Court rejected that argument. In its decision, it said that interpreting the law in that manner went against Congress’ original intent with the law, which was to use government-administered subsidies to help people purchase health insurance.

As Chief Justice John Roberts wrote in the ruling, which passed with a 6-3 vote, “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.”

Justice Roberts also said the subsidies should be allowed “for insurance purchased on any exchange created under the [ACA].” He added that they’re “necessary for the federal exchanges to function like their state exchange counterparts, and to avoid the type of calamitous result that Congress plainly meant to avoid.”

So, even if the wording in certain parts of the bill wasn’t as clear as it could be, the intent of lawmakers was the key deciding factor in continuing to allow the subsidies.

Financial implications

If the court hadn’t decided in favor of letting the Affordable Care Act stand as-is, millions of people stood to lose their insurance coverage – and this would’ve drastically hurt every hospital’s bottom line.

In fact, research released shortly before the Supreme Court’s decision said that hospitals lose, at minimum, $900 per patient when treating people who don’t have health insurance, according to an article in Modern Healthcare.

So hospitals in states where money’s been set aside to expand Medicaid under the ACA won’t have to worry about shouldering as much of the cost for treating uninsured patients.

Facilities in states that didn’t expand Medicaid may not be so lucky. The study indicates that in 2022, these hospitals will spend $6.4 billion on uncompensated care.

Future of health reform

Since the High Court has officially weighed in on the legality of the ACA, the law’s not likely to face a challenge of this magnitude again. Certain aspects of the law may still be debated, but the result is more likely to be an amendment, instead of a flat-out repeal.

And now that it’s clear the ACA’s not going anywhere, a handful of states that didn’t set up exchanges initially are now working toward creating their own. So the financial picture may improve for even more hospitals down the line.

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