ARP will bolster hospital margins by reducing the numbers of uninsured, which is a credit positive.
The expansion of health insurance access and premium subsidies under the $1.9 trillion American Rescue Plan are among the actions that "would subtly improve the revenue profile and reduce cost pressures for not-for-profit hospitals," Fitch Ratings says.
The ARP provides about $8.5 billion in direct aid but only to rural providers. However, Fitch says the ARP will help all hospital margins by reducing the numbers of uninsured, which is a credit positive.
"The most significant measures," Fitch said, "temporarily subsidize healthcare coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA), subsidizing the premium at 100% through the end of September; provide additional funding/incentives to expand Medicaid coverage in those states that have not yet done so; and expand Affordable Care Act premium subsidies."
To get more people insured, the Biden administration announced this week that it would extend the special enrollment period to August 15.
Medicaid expansion would have a substantially positive effect on providers in states that have expanded the insurance program because it will reduce the numbers of uninsured patients while increasing Medicaid volumes.
"The law increases the Federal Medical Assistance Percentage by 5 percentage points for two years for states that have not already expanded Medicaid," Fitch said.
States that expanded during the public health emergency may also receive the coronavirus 6.2 percentage point FMAP increase.
When Medicaid expanded in 2014–2015, upgrades of Fitch's rated credits outpaced downgrades by 3:1.
ARP also cuts premium costs for Affordable Care Act plans by increasing tax credits and capping premium contributions at 8.5% of income for mid-level health plans. Those who earn 100% to 150% of the federal poverty level will not pay any premiums.
Congress could make some of these measures permanent, supporting the Biden administration's goal of improving access to healthcare.
In line with greater Medicaid coverage, the law increases Medicaid coverage for coronavirus testing and treatment and clarifies that the federal matching rate for vaccinations is 100% for those covered by Medicaid.
The ARP also allocates $50 billion for the Disaster Relief Fund, which could be used to help hospitals with personal protective equipment and other supplies.
The recent confirmation of Xavier Becerra as Secretary of the U.S. Department of Health and Human Services, who is considered a strong supporter of ACA expansion, is seen as further confirmation of the expected direction of healthcare policy.
The Centers for Medicare and Medicaid Services announced earlier this year that it plans to rescind Trump administration approval of Medicaid work requirements.
John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.
KEY TAKEAWAYS
Medicaid expansion would have a substantially positive effect on providers in states that have expanded the insurance program.
States that expanded during the public health emergency may also receive the coronavirus 6.2 percentage point FMAP increase.
When Medicaid expanded in 2014–2015, upgrades of Fitch's rated credits outpaced downgrades by 3:1.