In Tennessee, Hospitals Want Obamacare, Republicans Don't

Some of the nation's biggest hospital chains stand to lose hundreds of millions of dollars if the justices invalidate the subsidies. Yet they haven't been able to make the state’s Republicans budge.

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Photographer: RUSTY RUSSELL/Getty Images

Conventional wisdom says big corporations that employ lots of people in a state generally call the shots with local politicians, especially when those corporations are the source of major campaign contributions.

But that's not the case in Tennessee. At least when it comes to Obamacare.

Tennessee is looming as ground zero for the political fallout from the Supreme Court's decision, which could come as early as Thursday, on the insurance subsidies at the heart of President Barack Obama's health care law. Some of the nation’s biggest hospital chains are based in the Volunteer State and stand to lose hundreds of millions of dollars if the justices invalidate the subsidies. Yet they haven't been able to make the state’s Republicans budge off their stance against the health care law.

Led by Senators Lamar Alexander and Bob Corker, Republican members of the state's congressional delegation have remained steadfastly against the Patient Protection and Affordable Care Act despite receiving campaign donations from executives at hospitals, some of their state’s biggest employers.

Hospitals nationwide are going to be in some trouble should the Supreme Court rule against health-insurance subsidies for more than 6 million people—including about 156,000 in Tennessee—that are at the heart of the law. 

The biggest for-profit hospitals have about 2 percent to 5 percent of their earnings at risk if the subsidies go away, according to an analysis by Bloomberg Intelligence. That could amount to hundreds of millions of dollars in lost profits for large hospital companies.

Tennessee, where HCA Holdings Inc. and Community Health Systems Inc. are among the largest employers, is one of the most glaring examples of the situation playing out across the country, with health-care executives growing more frustrated with their inability to get lawmakers to listen.

"Any kind of thing to do with so-called Obamacare, they’re opposed to," Wayne Smith, chief executive officer of Franklin, Tennessee-based Community Health Systems Inc., said of lawmakers across the country at an investor conference in June. "It doesn’t matter if it’s rational or not, if it’s good for the state, it doesn’t matter anyway. That’s the biggest hurdle I see."

All told, employees of Community Health Systems have given at least $178,000 to members of their congressional delegation, according to figures compiled by the non-partisan Center for Responsive Politics and made available by the Sunlight Foundation. Of the more than $47,000 given by Smith, the vast majority — $41,650  — went to Tennessee Republicans including Alexander and Corker and Representatives Marsha Blackburn, and Diane Black who are opposed to Obamacare. Smith, who has also backed Jim Cooper, one of the state’s two Democratic representatives, wasn’t available for an interview.

Alexander’s press office said he hasn’t been influenced in any way by the hospital executives of his state.

"The answer to your question is no," his office said in a statement. "From the beginning, Senator Alexander has led the fight against Obamacare."

Alexander does believe Congress needs to help people who lose coverage if the court rules against the administration, his office said. He's one of a number of Republican congressional leaders promising an as-yet unspecified plan to help people who lose health care subsidies if the Supreme Court rules against them.

The fear in the health-care industry is that without the financial help, people would stop paying for insurance, except the very sickest. That would create what’s known in the industry as a death spiral, where the premiums of those who hold on to their coverage aren’t enough to pay claims, ultimately disrupting the market for even those who don’t get subsidies.

That means fewer patients showing up at hospitals with insurance to cover the services they need.

HCA, based in Nashville, Tennessee, probably has the largest proportion of its profits tied to people who gained coverage on the federal exchanges. That’s in part because hospitals in Florida and Texas, two big states whose Republican governors opted to use the federal exchanges rather than creating their own,  account for almost half of its revenue. The company, founded by the father of former Senate Republican Leader Bill Frist,  has filed a brief at the Supreme Court in support of the Obama health care law.

"It is very important to us that reform continues," HCA CEO Milton Johnson said at an investor conference last month. "We think it’s the right thing to do. We’ve supported reform from the beginning."

HCA employees have given more than $436,000 in campaign donations to members of Tennessee's congressional delegation. Johnson and his wife, Denice, account for $20,600. With one exception — a $1,000 contribution to Cooper   — all of the Johnsons' money has gone to Republicans, including presidential candidates Mitt Romney in 2012 and John McCain in 2008 -- both of whom have said they oppose Obamacare. They have also donated to Black and to Chuck Fleischmann, another Republican representative from Tennessee who wants to repeal Obamacare.

Johnson wasn’t available for an interview, HCA said. In a statement, the company said it favors providing quality health care to more people.

The hospital industry splits its political contributions, according to data compiled by the Center for Responsive Politics. The American Hospital Association and the Federation of American Hospitals, which represents for-profits, split their political donations almost evenly between Democrats and Republicans in 2014. They favored Democrats in 2008 and 2010.

The press office of Corker, Tennessee’s other Republican senator, had no comment. Nor did three other representatives from districts near the hospitals’ headquarters. Tennessee has nine congressional districts, seven of which are held by Republicans.

One of the Democrats, Cooper, teaches health policy to graduate business students at Vanderbilt University. In a statement, he noted that the hospital companies based in the Nashville area backed Obamacare and Governor Bill Haslam’s failed attempt to expand Medicaid under the Affordable Care Act.

 "Nearly 155,000 Tennesseans are accessing health coverage through the federal exchange because Tennessee has declined to start its own," Cooper said. "Those Tennesseans stand to lose their coverage if King prevails, and we are hopeful that the state will respond quickly and not allow them to be left out in the cold."

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