A decision from the U.S. Supreme Court striking down subsidies in the 34 states that did not establish their own health insurance exchanges would have various credit effects on nonprofit hospitals, according to a comment discussion of King v. Burwell from Moody's Investor's Service.
A ruling striking down the subsidies provided under the Patient Protection and Affordable Care Act in states that did not establish their own insurance exchanges would cause the uninsured rate in those states to increase. "This would be credit negative for hospitals due to higher uncompensated care costs as more individuals give up insurance coverage," according to Moody's.
The hospitals located in states that have not expanded Medicaid would be hit the hardest by the high court striking down subsidies. "To date, hospitals in these states have experienced small improvements in payer mix through a reduction in exposure to self-pay," according to Moody's. If the subsidies are blocked by the Supreme Court, hospitals in these states "will lose the small payer mix gains, while continuing to absorb ACA related reimbursement cuts," according to Moody's.
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