Supreme Court Affordable Care Act Ruling and its Impact on Health Care Industry Sectors

Last month’s U.S. Supreme Court ruling on the Affordable Care Act not only upholds the Act’s implementation but will also impact a variety of industry sectors nationwide. The decision clarified that tax subsidies available for use in health insurance exchanges “established by the State” included exchanges set up by the states as well as those run by the federal government.

The ruling noted that a strict reading of the law would leave millions of Americans without premium subsidies, effectively destroying the health insurance market by causing premiums to increase even more – a result that Congress never intended. Many critics of the ruling believe the Court overstepped its bounds with a generous interpretation of the law, as opposed to a literal reading of the statute’s language.

The Supreme Court’s decision represents a major policy clarification to the Affordable Care Act, ensuring that the Act’s implementation will continue as Americans debate the merits of the law. The decision affects TPMA’s clients and their constituents across the nation, including individuals, small businesses eligible for premium subsidies, larger businesses who must comply with the Shared Responsibility provisions, as well as industry sectors with a stake in ensuring broader health insurance coverage for all Americans.

The affirmation of the federal tax credits significantly impacts key industry sectors and employers in the communities where TPMA works. Tax credits represent forgone federal tax revenue, which impacts budget decisions and priorities. Premium credits ultimately incentivize a certain behavior or choice, which can cause market inefficiencies.

However, the premium credits also make it possible for more individuals, particularly lower income employees of small businesses to obtain coverage and reduce the likelihood of defaulted medical debt. This keeps insurance more affordable for businesses and individuals across the board. The inclusion of younger, healthier individuals in the broader insurance market also spreads risk, stabilizing costs for all. Industry sectors like hospitals, health systems, and insurance companies benefit from increased coverage rates induced by the tax credits through lower rates of uncompensated care, and the ultimate result is less “cost-shifting” from the uninsured to the insured in the form of premium rate increases over time.

TPMA looks forward to identifying how this decision will specifically impact our clients and helping to operationalize any policy or programmatic changes resulting from the ever-evolving healthcare delivery landscape.