Moody's: Long-term credit impact of ACA exchanges on nonprofit hospitals is unclear

The health insurance exchanges are one of the significant features of the Affordable Care Act, and developments over the next two years will likely determine the credit implications of the exchanges for nonprofit and public hospitals, according to a new Moody's Investors Service report.

"Despite improved insurance coverage, the long-term credit impact of the exchanges on nonprofit hospitals has not been settled," Daniel Steingart, a Moody's vice president – senior analyst, said in the report.

Many payers incurred losses selling individual insurance products on the exchanges, causing some to offer plans in fewer markets in 2017. This is credit negative for nonprofit hospitals, as there will be less coverage options for patients and the uninsured rate will likely increase, according to Moody's. 

High-deductible health insurance plans sold on the exchanges could also negatively impact nonprofit hospitals' finances.

"Many plans sold on the exchanges have very high deductibles that hospitals must collect from patients to receive full payment for services provided. Although bad debt declined significantly after the ACA was implemented and many patients gained insurance for the first time, it has recently stabilized and is likely to begin rising again," Mr. Steingart said.

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