The nonprofit hospital sector is likely to receive a financial boost from the Biden administration, according to a new report from Fitch Ratings, calling the impact of planned policies "largely positive."
Fitch attributes the potential upside for hospitals to the administration’s intentions to bolster the Affordable Care Act, which could reverse losses in the number of insured under the Trump administration.
Other items on Biden's agenda, including raising the income eligibility for subsidies, boosting premium tax credits and encouraging states to expand Medicaid, should also generally benefit the sector, Fitch noted.
Hospitals were hit hard during the first wave of the COVID-19 pandemic, as many were forced to cancel elective procedures in order to prevent further spread of the virus and ensure there was enough capacity to treat patients who were infected. Their patient volumes have since rebounded, but most remain below pre-COVID-19 levels.
As a result, some hospitals saw their discharges drop by more than a third at one point in 2020, while some saw their revenues drop by nearly one-half. The sector lost at least $20 billion last year as a result by one estimate.
Their issues were further aggravated by the hostility the Trump administration showed toward the ACA, taking numerous steps to make it more difficult to enroll in health plans, such as withholding marketing and advertising dollars. That and other actions caused the nation’s overall rate of insured to dip. At least 2.3 million Americans lost coverage between 2016 and 2019, according to data from the Center for American Progress.
Although those challenges have yet to seriously abate, there appears to be good news on the horizon for acute care providers.
Biden has already released numerous executive orders intended to strengthen the ACA, including announcing a special enrollment period for the Healthcare.gov exchange that will begin later this month.
The administration is also expected to raise income limits for premium subsidies and push the 12 states that have not yet expanded Medicaid eligibility under the ACA to do so.
That last move "would be credit-positive for hospitals in states where Medicaid has not been expanded, although political headwinds in key states like Texas persist," the Fitch report noted. It added that time will tell if the Biden administration will roll back Trump-era Medicaid work requirements and block grants.
Since Biden did not make adding a public option a big part of his campaign, Fitch said major changes to Medicare are unlikely, especially given the narrow margins of Democrats' control of Congress.