Hillary Clinton's healthcare proposals a mixed bag for nonprofits, Trump plan lacks detail, Fitch says

Hillary Clinton's healthcare proposals carry short-term benefits but some uncertainties and risks in the long-term for nonprofit hospitals, while the lack of specificity surrounding Trump's professed plans to repeal and replace the Affordable Care Act leave many guessing, said Fitch Ratings in a published commentary on their website.

"While the proposed universal Medicaid expansion and proposed cost controls are generally positive over the near term, the longer term effect of expanding Medicare eligibility and implementing a 'public option' is uncertain," Fitch said.

First, Clinton's plan to expand Medicaid in the 19 states that declined to do so would benefit nonprofit hospitals in those states. Looking at the results in those states that chose to expand Medicaid, Fitch said they would expect higher patient volumes, and decreases in bad debt and charity deductions from revenue.

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Hospitals in the few states that have implemented expansion alternatives like waiver programs would see some benefit, but not as much, Fitch said.

However, the long-term picture is a little different, said Fitch. The benefits to these proposals could lessen with a forecasted deterioration in payer mix. In states that expanded Medicaid, they said, hospitals saw a decline in commercial insurance was not balanced out by decreases in bad debt or supplemental reimbursement from the state through programs like the Disproportionate Share Hospital program and provider-tax and provider-fee programs. Moreover, supplemental revenue streams like those programs are generally vulnerable to funding cuts.

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Clinton's proposed expansion of access to health insurance exchanges no matter what a person's immigration status is, along with increased reimbursement to aid access in rural areas, will also likely yield positive results for nonprofit hospitals, with reduced charity and bad debt expense, as well as incremental reimbursement for telehealth, federally qualified health centers and rural health clinics all forecasted as outcomes, Fitch said.

However other proposals are tougher to assess in terms of impact, like Clinton's plan to implement premium and drug cost controls. Fitch said results of this would vary by hospital, particularly when it comes to premium increases coupled with growing interest in owning health plans.

Clinton's proposal to implement a broaden medicare eligibility and institute a "public option" is also unclear, and therefore hard to assess, but Fitch said it "has the potential to negatively impact the sector".

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"Her proposal includes allowing people over 55 years old to purchase Medicare coverage, which may push revenue mix further toward Medicare and away from commercial insurance, compressing overall reimbursement. The impact largely depends on whether existing supplemental reimbursement mechanisms that offset care would be reduced for the uninsured/underinsured. The impact could also hinge on whether the incremental revenue from Medicare/Medicaid, and the public option, reimbursement would offset that loss."

Fitch said they have not spoken out on the Trump healthcare plan due to the "lack of specificity on what would be implemented after his 'repeal and replace' strategy.

Twitter: @BethJSanborn