|[September 25, 2013]
Fitch: ACA Political Showdown Negative for U.S. Healthcare
NEW YORK --(Business Wire)--
The political showdown developing in Congress regarding the Affordable
Care Act (ACA) could bear negative implications for the U.S. healthcare
industry, according to Fitch Ratings, especially if these debates dampen
the early benefits of expanding health insurance coverage through the
Fitch believes the implementation of the ACA's health insurance
expansion elements in early 2014 will be a catalyst for growth for the
industry. The federal government projects the addition of 19 million
Americans to the insured rolls in 2014-2015 due to the expansion of
state Medicaid programs and the individual mandate to purchase health
insurance. The expected benefit to the industry stems from a cumulative
effect of increased demand for healthcare services by the newly insured
and a lower financial burden of caring for uninsured patients.
The expansion of health insurance under the ACA would coincide with
organic growth in healthcare spending that is well below historical
levels for the past several years. According to data published last
week, the Centers for Medicare and Medicaid Services project a
continuation of weak growth of below 4% in national health expenditures
in 2012-2013. The weak economic recovery, an ongoing 2% sequestration of
Medicare payments and the branded patent drug cliff are all contributing
The expansion in health insurance is expected to help defray the
negative effects of the ACA on the healthcare industry's profitability.
For the past several years, companies have been absorbing various tax,
fees and payment cuts required by the legislation, including the 2.3%
medical device excise tax, the branded pharmaceutical industry fee and
reductions in Medicare payment rates to hospitals and other healthcare
Some Republican members are seeking to defund the ACA while some state
governments are hindering the ability of individuals to enroll in health
plans offered on the insurance exchanges planned to open on Oct 1.
Additional information is available on www.fitchratings.com.
The above article originally appeared as a post on the Fitch Wire credit
market commentary page. The original article, which may include
hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com.
All opinions expressed are those of Fitch Ratings.
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