‘ A sigh of re­lief ’ for the in­dus­try

High court’s de­ci­sion ‘ is a sigh of re­lief for the healthcare in­dus­try,’ an­a­lyst says.

Los Angeles Times - - FRONT PAGE - By Chad Ter­hune chad.ter­hune@latimes.com

Health in­sur­ers and hos­pi­tals are the big win­ners af­ter the Supreme Court de­ci­sion.

Health in­sur­ers and hos­pi­tals were big win­ners from a Supreme Court de­ci­sion that up­held bil­lions of dol­lars in Oba­macare sub­si­dies for U. S. con­sumers.

Many em­ploy­ers also ap­plauded the 6- 3 rul­ing on Thurs­day, fear­ing that chaos that might have en­sued from a rul­ing strik­ing down sub­si­dies in up to 37 states us­ing the fed­eral Healthcare. gov ex­change. Cal­i­for­nia had less at stake since it has es­tab­lished its own mar­ket­place.

The court’s de­ci­sion “is a sigh of re­lief for the healthcare in­dus­try,” said Me­gan Neuburger, an an­a­lyst at Fitch Rat­ings. “It’s ul­ti­mately pos­i­tive for hos­pi­tals and health in­sur­ers as it keeps the sta­tus quo, which has been ben­e­fi­cial to them.”

Hos­pi­tal and health in­sur­ance com­pany stocks ral­lied af­ter the court de­ci­sion.

Shares of hos­pi­tal chain Tenet Healthcare Corp. shot up $ 6.13, or 12.2%, to $ 56.21 in trad­ing Thurs­day.

Unit­edHealth Group Inc., the na­tion’s largest health in­surer, saw its shares jump $ 3.16, or 2.7%, to $ 122.33 af­ter the de­ci­sion was an­nounced.

Aetna Inc., the na­tion’s third- largest health in­surer, said it wel­comed the rul­ing be­cause the fed­eral as­sis­tance has been a ma­jor draw since last year in at­tract­ing 6.4 mil­lion cus­tomers to fed­er­ally run ex­changes.

An­a­lysts said the court rul­ing clears up some un­cer­tainty for the in­sur­ance in­dus­try, and it could help pave the way for a num­ber of mega- merg­ers that have been pro­posed in re­cent weeks.

Aetna has made an of­fer for ri­val Hu­mana Inc., a big player in Medi­care Ad­van­tage plans, and An­them Inc. is try­ing to ac­quire Cigna Corp. for $ 54 bil­lion.

Af­ter the court de­ci­sion, em­ploy­ers and other health in­dus­try of­fi­cials urged po­lit­i­cal lead­ers to tackle the un­fin­ished busi­ness of tam­ing the coun­try’s run­away med­i­cal spend­ing.

“If we do not do more to con­trol healthcare costs, the en­tire thing will col­lapse un­der its own weight re­gard­less of what the Supreme Court or any other po­lit­i­cal body says,” said Micah Wein­berg, pres­i­dent of the Bay Area Coun­cil Eco­nomic In­sti­tute, an em­ployer- backed group in San Fran­cisco.

Em­ployer groups said they hope that the court de­ci­sion al­lows Congress and the Obama ad­min­is­tra­tion to turn their at­ten­tion to ad­dress­ing nu­mer­ous is­sues re­lated to the qual­ity and cost of care.

“The ad­min­is­tra­tion and Congress need to fo­cus on real health re­form — ra­tion­al­iz­ing the way we pay for and de­liver healthcare in this coun­try,” said Steve Wo­j­cik, vice pres­i­dent of public pol­icy at the Na­tional Busi­ness Group on Health.

A court rul­ing against the Obama ad­min­is­tra­tion in the King vs. Bur­well case wouldn’t have had any im­me­di­ate ef­fect on Cov­ered Cal­i­for­nia and its 1.2 mil­lion con­sumers re­ceiv­ing sub­si­dies be­cause it’s a state- run mar­ket­place.

Con­ser­va­tive ac­tivists in their un­suc­cess­ful chal­lenge ar­gued that a strict read­ing of the Af­ford­able Care Act made sub­si­dies avail­able only in states such as Cali- for­nia that cre­ated their own ex­change.

How­ever, Cal­i­for­nia of­fi­cials were con­cerned that a rul­ing against Oba­macare would have opened the door to changes in Congress that could have neg­a­tively af­fected Cal­i­for­ni­ans.

About 1.4 mil­lion Cal­i­for­ni­ans are en­rolled in the state ex­change and nearly 90% re­ceive some level of fed­eral sub­sidy. The av­er­age monthly sub­sidy was $ 436 per house­hold, ac­cord­ing to the state.

“While this is a ma­jor vic­tory for ex­change mar­kets, crit­i­cal chal­lenges re­main,” said Caro­line Pear­son, se­nior vice pres­i­dent at con­sult­ing firm Avalere Health. “Ex­changes need to fo­cus on in­creas­ing en­roll­ment and at­tract­ing younger, health­ier in­di­vid­u­als in or­der to en­sure a va­ri­ety of af­ford­able health plan op­tions.”

Michael Reynolds EPA

PRES­I­DENT OBAMA, with Vice Pres­i­dent Joe Bi­den at his side in the White House Rose Gar­den, talks about the Supreme Court’s de­ci­sion up­hold­ing bil­lions of dol­lars in Oba­macare sub­si­dies for U. S. con­sumers.

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