Fitch Ratings sees Indiana's decision to expand Medicaid as a positive credit factor for hospital providers in the state, and said the willingness of CMS and Indiana Gov. Mike Pence to negotiate an agreement could lead to Medicaid expansion in other states.
Fitch said it believes Medicaid expansion will benefit many hospitals in Indiana, with the biggest benefit anticipated for hospitals with the highest proportion of uninsured patients.
Last month, Indiana became the 28th state — plus Washington, D.C. — to expand Medicaid under the Patient Protection and Affordable Care Act. An estimated 350,000 uninsured low-income Hoosiers will have access to healthcare coverage over the next several years.
According to Fitch, most participants will have to pay a small monthly premium (equal to 2 percent of their household income), along with co-payments for certain services.
Fitch said it believes the agreement could accelerate Medicaid expansion in a handful of Republican-controlled states that have proposed similar premium payments.
Hospitals and health systems in states that have expanded Medicaid "are already realizing the financial benefit from increased insurance coverage," according to Fitch. However, the outlook isn't positive for the states that have chosen to forgo expansion.
"Depending on historical payer mix, we expect providers in states that have chosen not to participate in expanded Medicaid coverage to face increasing financial challenges in 2015 and beyond," Fitch said.
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