The most recent insurance mandate delay within the Patient Protection and Affordable Care Act only serves to hinder a new revenue source for nonprofit hospitals and health systems, according to Moody's Investors Service analysts.
Earlier this month, the Obama administration delayed the PPACA's employer mandate by another year for certain businesses. Under the law, businesses and companies with 50 or more employees are mandated to offer health insurance to those employees or pay a penalty of $2,000 per employee. The mandate will now take effect January 2016 for businesses that have between 50 and 99 employees.
The provision was originally due to take effect this year. However, business groups warned unresolved questions about reporting requirements would cause problems. The Obama administration decided last summer to delay its implementation until 2015 in order to give the government ways to simplify reporting requirements for employers and to adapt health coverage and reporting systems.
Moody's analysts said in a report that the delays of the employer mandate are a "credit negative" for nonprofit hospitals because they postpone coverage for the uninsured. Consequently, hospitals are likely to see increased or similar levels of bad debt and charity care.
Hospitals are already facing more than $300 billion in Medicare reimbursement cuts through 2019 under the PPACA. The employer insurance mandate was designed to offset some of those cuts, and Moody's analysts said the loss in short-term revenue will likely negatively affect nonprofit hospitals, especially those with high proportions of Medicaid patients.
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