President Obama’s re-election is big news for health care. Maybe.
Specifically, a report released by Moody’s Investors Services says, the Obamacare component that mandates health insurance for essentially everyone is now much more likely to go into effect than not.
According to the analysts from Moody’s, it is that mandate that was “most at risk” in the election campaign, and the adoption of the mandate is likely to increase newly insured patients’ demand for care, as well as reduce the number of unpaid medical bills.
On the flip-side of the health insurance coverage requirement, however, is that there will be fewer allowable write-offs from unpaid bills, and those that exist will not be enough to offset the cuts to what Medicare pays hospitals, as outlined in the Patient Protection and Affordable Care Act. Under the new law, those cuts total $150 billion over a decade, Moody’s points out. As well, the law contains other restrictions that are likely to reduce the credit strength of many hospitals, among them new payment models that reduce revenue, and new penalties for non-compliance.
While the U.S. Congress continues to work to address the United States’ deficit, the future of health care policy and funding remains unclear. Some spending cuts, referred to as sequestration, are scheduled to take effect in January, as per the 2011 Budget Control Act, which reduces what Medicare pays to hospitals by 2%.
Moody’s explains, “Even if the administration brokers a deal in the next two months that negates the sequester, there remains significant pressure to further reduce Medicare and other federal healthcare programs because of the magnitude of the federal deficit and the growth rate of healthcare spending nationally.”
On another note, Fitch Ratings has also released an opinion about the status of post-re-election health insurance, saying it’s virtually unchanged, and pointing out that while insurers are likely to benefit by a greater number of policyholders, they will also face pressure on their profit margins because of Obamacare’s medical loss-ratio restrictions.