SCOTUS Saves POTUS: How the ACA Verdict Affects Healthcare

June 25, 2015

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Today’s 6-3 decision by the Supreme Court of the United States (SCOTUS) hands a huge victory to Barack Obama, the President of the United States (POTUS), locking in place one of the President’s signature public policy initiatives of his two terms in the White House. While the political debate and legal challenges to the Affordable Care Act (ACA) will likely continue, today’s ruling will allow the healthcare industry to relax knowing the shape of the market won’t change very much in the next few years.

The Court upheld the ability of people living in the 34 states that have not created their own health insurance marketplaces to receive federal tax subsidies that reduce the cost of their coverage by as much as 90 percent. An estimated 87 percent of the 8 million people who have purchased coverage in the insurance marketplace have received some form of subsidy (eligibility goes up to 400 percent of the federal poverty line, or more than $90,000 for a family of four). Economists predicted that without that financial lift most of those individuals and families would have dropped coverage because they couldn’t afford the cost of coverage on their own.

So what does this mean for the U.S. healthcare industry? Corporate America likes stability and predictability, and many in healthcare were holding their breath leading up to today. Now, with the insurance subsidies locked into place, insurance companies can exhale. Hospitals, physicians, nursing homes, pharmaceutical companies and other providers of healthcare services and products now know that the income streams resulting from those millions of newly insured Americans will continue to flow. That’s one reason why hospital stocks shot up across the board after the decision was announced.

This doesn’t mean the drama is over. Members of Congress and presidential candidates will be debating repeal of the ACA but there is little chance – for now – that the rhetoric will turn into reality.