Here's one consequence of the Supreme Court's healthcare-reform decision: States with low Medicaid eligibility thresholds that choose not to expand Medicaid would leave poor adults to churn between subsidized commercial insurance and no insurance whatsoever.
Yesterday's decision created a potential gap in coverage for poor adults. Here's how: The Supreme Court said that the federal government cannot enforce an expansion of Medicaid eligibility by threatening to cut off all Medicaid funding to states that fail to expand. That leaves states free to ignore Medicaid expansion under the law.
Poor adults were expected to benefit most from Medicaid expansion, which opens the safety-net insurer to everyone with incomes below 133% of the federal poverty guidelines starting in 2014.
As of January, eligibility for poor, working parents in 33 states is capped below 100% of the federal poverty guideline ($23,050 for a family of four), a survey by the Henry J. Kaiser Family Foundation shows. Adults without children are completely ineligible for Medicaid in all but eight states, but can receive limited health benefits or premium support in 17 states, the Kaiser Family Foundation said.
Meanwhile, subsidies for commercial insurance are available for those with incomes between 100% and 400% of the federal poverty guidelines.
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The risk that banks represent to healthcare borrowers since the credit crisis is by now familiar. Hospitals that enter debt markets with bank credit backing can find investors wary or uninterested when banks' own credit strength falters. That can drive up interest rates or force borrowers to rapidly buy back or refinance debt.
So it should come as no surprise that the downgrade of 15 banks by Moody's Investors Service last week would create uncertainty for some healthcare borrowers. Moody's included Bank of America, Citibank, Morgan Stanley Bank and the Royal Bank of Scotland on the list and dropped the banks' short-term credit rating to P2 from P1.
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West Penn Allegheny Health System, with help from insurer Highmark, saw its B+ credit upheld by Fitch Ratings. The New York rating agency, which downgraded the Pittsburgh health system in December, also changed its credit outlook to stable from evolving.
Fitch analysts said its rating depends on Highmark's plans to acquire West Penn Allegheny and the insurers' financial support for the struggling system. The health system's operating losses also shrank in the third quarter to $22.6 million from $32 million the prior three months, if you don't count additional losses from West Penn Allegheny's turnaround efforts, said Fitch.
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Analysts with Moody's Investors Service did not change the Caa1 bond rating for West Penn Allegheny Health System, the distressed Pittsburgh health system in line to be acquired by insurer Highmark.
That deal with Highmark—which includes $400 million in grants and loans for West Penn Allegheny and $75 million for medical education— likely saved the health system from restructuring and a possible default, said analysts.
It may also not be enough, apparently.
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New projections for U.S. health spending, released earlier this week, were the latest figures to suggest that households and employers have responded to the weak economy by spending less on healthcare.
The trend has been pronounced in federal spending estimates and projections since 2009, when U.S. health spending growth hit a historic low rate of 3.8%. (The average annual growth rate, since record keeping began in 1960, is 9.6%.) The first look at 2011, included in this week's data, shows the “lingering effects of the recent recession and modest recovery,” wrote the economists and actuaries who compiled the projections for the CMS in the journal Health Affairs.
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As has been reported here previously, the cost of healthcare regularly creates financial stress for U.S. households. The Great Recession made matters more difficult. Even with insurance coverage, falling ill frequently means trouble with medical bills and debt.
For hospitals, that translates to write-offs for patients who cannot pay. Healthcare executives, analysts and actuaries have also said a noticeable slowdown in healthcare spending that accompanied the weak economy suggests that households may be delaying medical care.
Delays appear to be widespread among older adults who lack insurance. That's according to a new analysis of access to care and financial distress among adults age 55 and older. The Henry J. Kaiser Family Foundation analyzed survey data from the Center for Studying Health System Change for adults ages 55 to 64 and seniors covered by Medicare.
The analysis, published in a recent report, compared survey responses for uninsured and privately insured older adults too young for Medicare. Adults were asked if they had unmet medical needs, delayed seeking care, had difficulty paying for prescriptions or if their household struggled with medical bills.
Unsurprisingly, uninsured older adults were more likely to report access and financial problems. Nearly all uninsured adults who struggled with access said the reason was cost.
Here's a look at comparisons:
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Fairview Health Services saw its credit rating from Moody's Investors Service drop one notch, and analysts said the outlook for the system is negative, in part because of the exit of its chief executive officer and turmoil over the health system's contracts with Accretive Health.
Moody's lowered Fairview's credit to an A3, a relatively strong rating, from A2. The Minneapolis-based system, which includes seven hospitals, saw its operating margin for 2011 (0.5%) squeezed by a new children's hospital and information technology installation, the rating agency said. Cash reserves declined last year. And its debt portfolio includes swaps that have strained finances across the sector since the credit crisis.
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