A new report from Moody's Investors Service says that no matter how the Supreme Court rules on the Patient Protection and Affordable Care Act — which is expected to be any day now — non-profit hospitals will be negatively impacted.
There are three main scenarios on the ruling of the healthcare law:
1. First scenario. If the law is upheld, Moody's analysts think it would be a "credit neutral event" for non-profit hospitals. Hospitals have been gearing up for the law since April 2010, a month after it was signed by President Barack Obama, and in the long run, it could be negative as lower Medicare reimbursement rates to hospitals could outweigh the benefits of lower uncompensated care rates.
2. Second scenario. If the individual mandate is struck down but the rest of the law is upheld, this would be a credit negative for non-profit hospitals, according to the report. The individual mandate could offset losses suffered from uncompensated care, but no individual mandate means continued high rates of uninsured patients.
"Without the individual mandate — which we consider the most credit positive feature of healthcare reform for [non-profit] hospitals — the number of uninsured Americans will remain high," said Mark Pascaris, Moody's analyst and author of the report. "This will result in continued growth in uncompensated care provided by hospitals while Medicare reimbursement rate increases would decelerate."
3. Third scenario. If the PPACA is entirely wiped out, non-profit hospitals would suffer because there would be new uncertainty around the "unsustainable Medicare spending."
There are three main scenarios on the ruling of the healthcare law:
1. First scenario. If the law is upheld, Moody's analysts think it would be a "credit neutral event" for non-profit hospitals. Hospitals have been gearing up for the law since April 2010, a month after it was signed by President Barack Obama, and in the long run, it could be negative as lower Medicare reimbursement rates to hospitals could outweigh the benefits of lower uncompensated care rates.
2. Second scenario. If the individual mandate is struck down but the rest of the law is upheld, this would be a credit negative for non-profit hospitals, according to the report. The individual mandate could offset losses suffered from uncompensated care, but no individual mandate means continued high rates of uninsured patients.
"Without the individual mandate — which we consider the most credit positive feature of healthcare reform for [non-profit] hospitals — the number of uninsured Americans will remain high," said Mark Pascaris, Moody's analyst and author of the report. "This will result in continued growth in uncompensated care provided by hospitals while Medicare reimbursement rate increases would decelerate."
3. Third scenario. If the PPACA is entirely wiped out, non-profit hospitals would suffer because there would be new uncertainty around the "unsustainable Medicare spending."
More Articles on Moody's Reports:
Moody's: For-Profit Hospitals Stand to Suffer if PPACA Falls
Moody's: Health Insurers Face Negative Credit Risk if PPACA Stands
Moody's: The 5 Most Prominent Areas of Focus in High-Performing Hospitals