Texas Affordable Care Act Ruling and Healthcare Services— Looking Beyond the Headlines
DBRS Morningstar released a commentary titled "Texas Affordable Care Act Ruling and Healthcare Services—Looking Beyond the Headlines.” The ruling by a federal judge in Texas that the Affordable Care Act’s provision requiring health insurance plans to cover preventive care is unconstitutional has created consternation regarding potentially higher out-of-pocket costs for consumers and reduced access to healthcare services. DBRS Morningstar argues that there are important mitigating factors and that the actual credit impact on healthcare service providers, insurance companies, and public purses will be limited for the following reasons:(1) Employers will still be motivated to cover these costs.
(2) Public healthcare plans will also likely continue covering these services, as they have in the past.
(3) Taking a total lifetime cost approach, economic incentives will prompt private insurance companies to continue to cover these preventive services, even if they are no longer obliged to do so under the law.
“Following our view that the Texas ruling is unlikely to lead to the cessation of coverage under private plans, we believe it is unlikely that this development could lead to increased demand for public plan coverage. Therefore, the credit implications in terms of public-sector healthcare spending are limited. Over time, any significant drop in preventive care could result in higher spending on emergency services and palliative care, but that is not our base case,” notes Rohit Kumar, Assistant Vice President, Diversified Industries.
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