Moody's: House healthcare bill would hurt states, hospitals

Moody's: House healthcare bill would hurt states, hospitals
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Moody's Investors Service on Friday said that the House Republicans' healthcare bill would negatively affect the credit of states, for-profit hospitals, pharmaceutical companies and medical-device companies.

States would take a hit because the legislation "creates a new Medicaid cost-sharing formula that shifts a greater share of Medicaid expenditures to states," the credit rating agency said in a report.

The bill, which is expected to receive a House floor vote next week, would fund Medicaid on a per-capita basis, while current federal spending for the program isn't capped at a per-person dollar amount. It also would make changes to reimbursements for future enrollees in the Medicaid expansion.

The Congressional Budget Office has estimated that changes to Medicaid would reduce federal government spending by $880 billion over 10 years. 

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"It remains unclear how much of this reduction will be shifted to states given a number of variables, including the extent to which states make changes to benefits or enrollment eligibility under the new Medicaid funding structure," Moody's said. "States will face difficult decisions in this regard, given the already substantial growth in baseline Medicaid spending that is expected to occur."

Four Republican governors criticized the bill on Friday, arguing that it doesn't give them enough flexibility.

In a separate report, Moody's also said the bill would hurt hospitals, pharmaceutical companies and medical-device companies, especially in 2020 and later years.

"This is due to a combination of growth in the uninsured population and caps on federal Medicaid spending," the rating agency said. "That said, the effects over the next 12-18 months would be minimal because the biggest changes would not occur until 2020."

The legislation would repeal taxes that ObamaCare imposed on pharmaceutical companies and medical-device manufacturers. But Moody's said it expects that the tax cuts "would be more than offset by the negative effects of declining insured patients and Medicaid caps that would begin in 2020."

The reports did not mention that President Trump and House Republicans are considering changes to the bill that would allow states to impose work requirements on Medicaid recipients and receive block grants for the program.