Moody's: Hospital uncompensated care costs will rise under proposed Senate bill

Moody's Investors Service says Senate Republicans' proposed healthcare bill, dubbed the Better Care Reconciliation Act of 2017, would negatively affect hospital finances by causing the uninsured rate to rise.

"Under the proposed Senate bill, both for-profit and not-for-profit hospitals would face weaker demand for services and higher rates of uncompensated care expense, with the most significant impact on the sector occurring after 2020 when the changes to federal Medicaid funding are phased in," said Jessica Gladstone, a senior vice president at Moody' and lead analyst for Moody's-rated for-profit hospitals.

Under the proposed Senate bill, enhanced funding would be provided to Medicaid expansion states until 2021 and then slowly reduced over a three-year period. The bill would also convert Medicaid funding into a per-capita cap program and offer states the option to apply for funding as a block grant.

"Transitioning federal Medicaid payments to a per-capita, or block grant system, and freezing Medicaid expansion would reduce the number of people with insurance and increase hospitals' exposure to bad debt and uncompensated care costs," said Ms. Gladstone.

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