A securities analyst says the new federal court ruling against a Patient Protection and Affordable Care Act (PPACA) subsidy program is probably more of a buying opportunity for investors than a calamity for insurers.
In a new commentary, Sterne Agee CRT Analyst Brian Wright, who follows health insurers and hospital companies, looks at the possible effects of the District of Columbia decision on the PPACA cost-sharing reduction subsidy program.
A D.C. district court judge, Rosemary Collyer, concluded Thursday that PPACA drafters created a permanent appropriation mechanism for the PPACA premium tax credit subsidy program but not for the cost-sharing reduction program. That program helps 6 million low-income PPACA exchange users pay their deductibles and other out-of-pocket costs.
If the Supreme Court upholds Collyer’s ruling, and Congress failed to pass a cost-sharing reduction program appropriation, the U.S. Department of Health and Human Services (HHS) might have no way to keep the program going.
In most states, health insurers are filing 2017 individual health insurance rate proposals this week. Hospital and health insurance company stock prices fell sharply Thursday, due to investors’ fear that the death of the cost-sharing reduction program could hurt insurers’ revenue, throw off their pricing, and stick hospitals with billions of dollars in unexpected collections problems.
Wright says he believes investors were over-reacting.
Collyer stayed her ruling, to keep it from having any real-world effect, while it’s being appealed.