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King v. Burwell Case Challenges Obamacare

Health Administrators: Pay Attention

Written by Shannon Sakewski

Oral arguments in King v. Burwell began on Wednesday, March 4. The case, being considered by the Supreme Court, is a challenge to the Affordable Care Act (ACA). Specifically, Justices will consider whether the legislative language limits Marketplace subsidies to only those states with state-based Marketplaces. In 2015, only 14 states offer a state-based Marketplace. If King prevails in this case, over 8 million people-- those buying on the Federally Facilitated Marketplace-- could lose their health insurance subsidies, and the course of the ACA or Obamacare could be shifted.

Commentators and experts are split on their forecasts of the case, many of whom are refusing to weigh in with their predictions of the outcome. Until the ruling, which is expected in June 2015, we will be uncertain who will prevail. What we do know, per a recent Modern Healthcare article, is that there are no quick fixes in the works at this point.

So, why is it important for health administrators to pay attention to this case? Here are just a few (of many) reasons:

1.) Patient care is at stake.

If more than 8 million people lose billions of dollars in health insurance tax credits, it’s logical that coverage will become unaffordable for those individuals. According to a brief submitted by the HHS Office of the Assistant Secretary for Planning and Evaluation, individuals who are insured and receiving subsidies through the Marketplace will feel a 256 percent average rate increase. Unaffordable coverage means that, in turn, care will become less affordable. As a result, many patients will be apt to delay care until health issues become emergent—and, therefore, more expensive and perhaps life-threatening.

2.) There would be a significant impact on revenue.

If several million fewer paying patients are using the health care system, one can expect that revenue will decrease. However, everyone needs care from time to time. If patients begin delaying care for reasons related to affordability, historical health care trends indicate that those patients will receive care via uncompensated visits, possibly when their condition has advanced (and is therefore more expensive to treat). This would spell a significant set-back to health systems, whose costs related to uncompensated care are estimated to have decreased by $5.7 billion in 2014 alone.

3.) Lack of predictability has repercussions.

This article represents a simplistic view of the cost impact on health systems if King prevails. Many provider systems have also restructured facets of their business operations to meet the needs of an influx of new patients. Some have hired. Some have consolidated. Others have built entirely new service areas based largely on—and to compete for—projected new patient revenue. If those patients are no longer present or paying, what does that mean for your system? Each system has reacted slightly differently to the changing industry landscape, so responses to this question will vary.

Inspired to learn more about the case? Here are some resources:

Still have questions? Reach out via Twitter: @ssaksews and @healthadmdegree.

Author Bio: Shannon Saksewski
Shannon Saksewski has been practicing and studying health strategy in multiple contexts for more than five years. She earned a BA in psychology and studies in religion, a MSW focused on counseling practice, and a MBA focused on health strategy from the University of Michigan.