Growth in uninsured rate could ultimately affect nonprofit hospital ratings, S&P says

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The number of uninsured people is growing in the U.S. despite economic improvement, and while this trend so far has had no major effect on ratings for nonprofit hospitals, it could become a credit negative for these organizations, according to a report from S&P Global Ratings.  

The nation's uninsured rate fell to its lowest level in 2016 after the Affordable Care Act was implemented, and many states expanded Medicaid. However, the number of uninsured Americans has increased since then. A Commonwealth Fund survey showed the uninsured rate among working-age Americans climbed to 15.5 percent, compared to 12.7 percent in 2016.

"While legislative efforts to repeal the ACA seem to have abated, for now, the federal government and some states have taken steps to destabilize the exchange market and reduce Medicaid enrollment, while other states have moved to cement the gains of the ACA," S&P analysts wrote. "We expect these conflicting trends, and the difficult choices confronting states, to continue for the next few years."

In the meantime, the analysts said they have seen little effect on ratings for nonprofit hospitals and health systems, although they said they believe the growth in the number of uninsured people is contributing to organizations' increased operating margin pressures.

The trend, however, points to a potential credit negative for nonprofit hospitals and health systems over time, "as these facilities would likely see an uptick in self-pay patients, charity care and bad debt. This will be most acute at safety-net providers and other providers with a high concentration of Medicaid patients, as that population is most vulnerable to many of these changes,"  the analysts concluded.

The growth in the uninsured rate is not having a large effect on for-profit providers, they said.


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