U.S. hospitals, including Community Health Systems Inc., may suffer a significant blow if the Supreme Court takes away subsidies Americans get to buy health insurance under the Patient Protection and Affordable Care Act.
After the Court said today that it would rule on whether people in at least 34 states will be allowed to receive subsidies to buy insurance under the law, which has helped cut the number of uninsured showing up at hospitals.
After the Court’s decision to take up the case was announced, Community Health, the second-largest publicly traded hospital chain, dropped 6.7 percent to $47.19 at 2:35 p.m. HCA Holdings Inc., the largest U.S. hospital company, sunk 3.9 percent to $66.29.
Community Health is most at risk of all the major hospital companies, said Ana Gupte, an analyst at Leerink Partners LLC, with 96 percent of its hospital bed capacity in states with federally run exchanges.
Health insurers weren’t hit as hard. UnitedHealth Group Inc., the largest U.S. health insurer by sales, fell 3.1 percent to $93.20. Aetna Inc. dropped 2.6 percent to $82.48.
If the Court rules in favor of the Republican-backed suit, it’s not clear what would happen to the more than 4 million people who signed up for a subsidized health plan through a federally-facilitated exchange, said Chris Rigg, an analyst at Susquehanna International Group LLP.
“It’s hard to predict for sure how things could play out politically or administratively,” Rigg said in a note. “ As such, we view today’s ruling as a negative for the hospital group.”
Rigg said a ruling against the law would hurt hospitals more than insurers, which have less risk from uninsured people. Still, they would likely experience reduced enrollment revenue if a ruling in favor of the Republicans is upheld.
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