Dive Brief:
- Some investors got a little spooked this week when HCA Holdings, the largest for-profit hospital operator in the country, warned that the benefits of a growing number of insured patients under the Affordable Care Act would fade away over the course of this year.
- HCA made the statement while reporting Q2 earning results that beat analyst expectations, driven by healthy growth in hospital admissions and ER visits attributed to an influx of new customers.
- However, the firm was quick to note that enrollments may grow again in 2016 thanks to a stiffer individual coverage penalty next year.
Dive Insight:
It will take some time before the makeup of ACA's enrollee pool stabilizes enough for providers to effectively predict what revenues, costs, and admission numbers will look like going into the future. Part of the reason for this is that the health law's individual coverage mandate penalty is phased in over the course of several years, rising from a relatively modest level of $95 per adult or 1% of total annual household income (whichever is higher) in 2014 to a much more stringent $695 per adult or 2.5% of annual household income (whichever is higher) in 2016.
HCA, and many industry observers, believe that the significantly higher penalty level (which either more than doubles or rises by 25%, depending on what your income threshold is) for next year will likely bring in another influx of consumers in ACA's third year. Some are even optimistic that this could be a relatively healthy (and by extension, cheap to cover) patient population pool, since those who have held out from obtaining coverage so far may not need much care.
Ironically, if that second thesis bears out, it would be great news for payers—but potentially not as unequivocally good news for providers, who would like to see the covered populations utilize more services in order to bolster revenues.
