Becker's Hospital Review

9 Save the date! CEO Roundtable + CFO/CIO Roundtable — November 18-19, 2015 — Chicago. Please call 800-417-2035 to register. A lthough the practicality of the Patient Protection and Affordable Care Act being fully repealed becomes less likely as more time passes and more of its provisions are adopted, there is still a great deal of doubt surrounding the law. If a full repeal did occur, would Amer- ica's healthcare system slink back to the way it was pre-PPACA, or would it be forever changed? In the past five years, the PPACA has been challenged numerous times in the Supreme Court, and House Republicans have voted 54 times to try to repeal or severely cripple the law through funding cuts. On top of that, the PPACA is a sticking point for a presidential election, and it has been deemed one of the most controversial laws of the last 100 years. One of the Supreme Court challenges to the health reform law has been in the national spotlight for months. The case, King v. Burwell, is focused on the insurance subsidies provided under the PPACA. The health reform law states tax subsidies for health insurance are to be provided "through an exchange established by the state." Based on the text of the law, lawsuits were filed challenging an IRS regulation that allows for subsidies in all states, even those that didn't establish their own insurance exchanges. One possible outcome is that the court will block the subsidies in the more than 30 states that did not establish their own marketplaces. The high court heard arguments in King v. Burwell in March and is set to hand down its opinion in late June. Various parties, including healthcare organizations, have taken a strong stance on the issues involved in King v. Burwell. For instance, in early February, Nashville, Tenn.-based Hospital Corporation of America filed a friend-of-the-court brief showing strong support for keeping health in- surance subsidies in all states, saying the petitioners' legal theory in the case would have "absurd consequences." The possibility of the subsidies being done away with in the states that didn't establish their own exchanges is "so disruptive for the industry a contingency plan is necessary," says Kenneth E. Thorpe, PhD, a Robert W. Woodruff Professor and chair in the Department of Health Policy and Management at Emory University's Rollins School of Public Health. How- ever, if the possibility becomes a reality, it appears the industry will be ill prepared. In late February, HHS Secretary Sylvia Mathews Burwell sent a letter to Congress stating the Obama administration does not have a con- tingency plan if the Supreme Court blocks the subsidies. A lot of hospitals are on the same page as the government in that sense. "We've been surprised in speaking with healthcare executives in that they haven't done much in contingency planning," says Ceci Connolly, managing director of PwC's Health Research Institute. The lack of planning is likely attributable to some of the hospitals believing that the subsidies won't be thrown out and others feeling like there isn't much they can do if they are. The lead plaintiff challenging the subsidies is David King, a resident of Fredericksburg, Va., who works as a limo driver and makes approximately $39,000 a year. Mr. King and the three other Virginia residents who joined him in filing the lawsuit challenged the PPACA because they didn't want to be forced to buy health insurance or pay a penalty. With their legal chal- lenge, which hinged on seven words, making its way in front of the Su- preme Court, the possibility of other U.S. residents who oppose the law finding other provisions or words in the health reform law to challenge isn't an unlikely scenario. Controversy surrounding the PPACA is not limited to the high court and Congress, as the American people have voiced their strong support and opposition to the law. Since implementation of the PPACA's major provi- sions began in 2012, more Americans had disapproved of the law than approved of it. However, that changed in April, when PPACA approval was higher than disapproval for the first time since November 2012, according to a Kaiser Family Foundation tracking poll. Just because the tides have changed slightly does not mean the fight is over. The battle will continue in coming months as the Supreme Court hands down its opinion in King v. Burwell and Republican presidential candidates, including Sen. Rand Paul, MD, (R-Ky.) and Sen. Ted Cruz (R-Texas), con- tinue to promise a PPACA repeal as one of their first priorities if elected. The health reform law has had a significant effect on hospitals, insurance companies and the American people as a whole, and if the PPACA were gone tomorrow, the healthcare industry would immediately begin feeling the effects. Revenue from commercial payers would plummet If the PPACA were gone tomorrow, the biggest effect initially would be on revenue coming into hospitals. Hospitals have experienced revenue growth due to more insured patients coming in for care, as more than 15 million people have gained health coverage over the last two years. "In a short period of time, a great deal of people have become insured and that has meant paying customers," says Ms. Connolly. Hospitals across the country have seen about $20 billion in new revenue due to the health reform law, and if the PPACA were gone, the additional influx of funds would cease. The PPACA has had the most significant effect on hospitals that previously served large numbers of uninsured patients, such as safety-net facilities. Mr. Thorpe says if the PPACA were gone tomorrow, virtually all of the 15 million people who gained coverage under the health reform law would lose it. With the vast majority of people who signed up for coverage us- ing the PPACA insurance exchanges receiving subsidies to help pay their health insurance premiums, most would not be able to afford to keep their coverage if the law and its subsidies disappeared. "The hospital industry only remains profitable because it has privately in- sured patients, and without that, it would struggle," says Mr. Thorpe. Medicaid revenue would drop Hospitals in states that expanded Medicaid under the PPACA would also feel the effects of those Medicaid patients once again becoming uninsured. The PPACA calls for all states to expand their Medicaid programs. Howev- er, the 2012 Supreme Court decision made Medicaid expansion optional, and as of March 6, 29 states, including Washington, D.C., had expanded their programs, according to Kaiser Health Facts. "If you look at all the data, hospitals in states where Medicaid expansion was adopted are benefiting," says Gregory F. Hagood, senior managing di- rector and president of SOLIC Capital.

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