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S&P: Health providers still face PPACA flu

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Stability in the Patient Protection and Affordable Care Act (PPACA) exchange program rules may help health care providers in the short run, but PPACA’s pressure on insurers could soon squeeze providers.

David Peknay and other credit analysts at Standard & Poor’s Ratings Services make that prediction in a new commentary on the risks U.S. health care providers may face from the effects of PPACA on private health insurers.

See also: S&P charts insurers’ PPACA lifeboat problems

The U.S. Supreme Court recently upheld the authority of the U.S. Department of Health and Human Services (HHS) to provide PPACA exchange plan premium subsidies through HHS-run PPACA exchanges. If the court had stopped HHS from offering exchange plan subsidies, that could have increased the amount exchange users pay out of pocket for coverage to about 80 percent. That, the analysts say, could have increased the size of the uninsured population, and the number of patients unable to pay their bills.

But, even though the Supreme Court ruled in favor of HHS in the King vs. Burwell case, some exchange plan issuers still seem to be on track to increase their premiums an average of 20 percent and 50 percent in 2016. Those rate increases could push some consumers to drop their coverage, the analysts say.

If state regulators prod some health insurers to reduce 2016 rate increases, those insurers may have more of an incentive to use a value-based insurance design, the narrow networks and other mechanisms to hold down benefits costs, the analysts say.

Aggressive cost-control efforts of private health insurers could be an especially serious problem for for-profit hospitals and other types of providers that tend to get a high percentage of their revenue from patients with private health coverage, the analysts say.

See also: HCA preliminary adjusted profit beats analysts’ estimates