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Analysis

Biden Presidency, Divided Congress 'Credit-Neutral' for Healthcare Sector

By Jack O'Brien  
   November 18, 2020

Fitch stated that a divided government lessens the likelihood for "transformative change" that would hamper the credit profiles of both payers and providers.

The U.S. election results are credit-neutral for providers, insurers, and the broader healthcare sector, according to a Fitch Ratings report released Tuesday afternoon.

The prospect of an incoming Biden administration and a divided congress, with Republicans maintaining control of the Senate and Democrats maintaining control of the House, is likely to create "legislative gridlock" with the potential for "some compromise."

The ratings agency said the pending fate of the Affordable Care Act (ACA) and the support for President-elect Biden's healthcare agenda will be "key credit-related items" for healthcare organizations.

The focus of Biden's healthcare agenda is building upon the ACA by introducing a public option and lowering the age of Medicare eligibility to 60. Additionally, the Biden plan centers around curbing surprise billing and lowering prescription drug prices.

Related: Healthcare Groups Applaud Biden on Winning Presidency

"If President-Elect Biden is able to work across party lines, the striking down of the ACA by [the Supreme Court] could be resolved with new healthcare legislation," the report stated. "[He] could get bipartisan support on some aspects of his less controversial policy proposals, including ending surprise billing and limiting increases on prescription drug prices."

The Fitch report was released one week after the Supreme Court heard oral arguments in California v. Texas, an ongoing case which could decide the fate of the ACA and have repercussions for hospitals and health systems. Fitch stated that a ruling in the case is not likely until mid-2021. 

Related: What SCOTUS Oral Arguments in ACA Case Mean for Hospitals

Fitch stated that a divided government lessens the likelihood for "transformative change" that would hamper the credit profiles of both payers and providers.

Related: Healthcare Groups Concerned for COVID Response Amid Halted Presidential Transition

The report concluded that if Democrats were to gain control of the Senate by winning two upcoming runoff elections in Georgia, then a so-called "Democratic sweep" would have a mixed effect on the healthcare sector.

The ratings agency stated that expanded healthcare coverage resulting from a Democratic-controlled federal government would be credit positive for nonprofit hospitals due to increased revenues but added that efforts to strengthen the ACA, should it be upheld by the Supreme Court, could include "reinstating some industry taxes and fees never implemented."

Related: Fitch says CARES Act Paybacks Won't Be a Problem for Nonprofit Hospitals

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.

Photo credit: Democratic nominee Joe Biden made an abbreviated campaign visit to Grand Rapids, Michigan, on Friday, hours after he tested negative for the coronavirus in two separate tests. September 21,2020. / Editorial credit: Alex Gakos / Shutterstock.com


KEY TAKEAWAYS

The focus of Biden's healthcare agenda is building upon the ACA by introducing a public option and lowering the age of Medicare eligibility to 60.

The ratings agency stated that expanded healthcare coverage resulting from a Democratic-controlled federal government would be credit positive for nonprofit hospitals due to increased revenues.


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