Hospitals Noticed Lower Interests Rates after the Affordable Care Act

According to a study conducted by the Government Finance Research Center at the University of Illinois, Chicago. It is emphasized that the Affordable Care Act (ACA) played a great part in improving the hospital’s economic condition but it did not help in lifting the profitability.

In other words, the interest rates have decreased by 39 basis points on healthcare public bonds in comparison to a group of non-health public bonds. 

This resulted in interest savings in healthcare issues of about $3 million and aggregate interest savings of about $1.74 billion on all public bonds in healthcare from 2012 to 2017.

The study stated that this resulted in the urge to invest more in patient satisfaction, medical instrument, and the development and training of staff. All of which are much more needed measures especially for private and urban hospitals.

Dermot Murphy, co-author and UIC associate professor of finance in the College of Business Administration explained in the press release that hospitals had a clear benefit from the decrease in non-guaranteed from ACA. 

But the investors are not sure of how long these benefits will last.

The study has also found that the Affordable Care Act (ACA) is good for the overall fiscal health of hospitals. 

For instance, it was found in one of the studies that 69% of certified health centers especially in Medicaid expansion states were considerably more improved and stable since the application of the ACA. 

Also, it is proved as the best suitable implementation to deliver social service and behavioral health. 

Despite some great risks the financial condition of these healthcare centers has improved. 

As more people are assured through certain provisions by the ACA, hospitals have suffered less unsalaried costs and have earned more Medicaid for patients who are unable to pay for their treatment.

This study has shown its concern by stating that the long-term public bonds have had more success with ACA. Versus the short term bonds because there is a wider chance that ACA would be repealed by the Trump Administration. 

This would be a high-risk situation because firstly, $10 million would be at the threat of Americans and the credibility of hospitals to provide high-quality service will be affected.

There have been certain attempts, in fact, to revoke the ACA since 2017. 

However these attempts were constantly discouraged due to not getting enough votes in the Senate, still, these votes could leave an impact on healthcare centers’ fiscal policy.

If somehow the policymakers managed to get an ACA repeal, it will leave a greater impact in hospitals especially in the rural regions. Additionally, the aids and funds will be required to allow for it to remain in operation. 

The study further stated that the obstacle of the repeal of the ACA is the reason why long-term bonds are not being encouraged. Even though no matter how much the ACA has relatively positively impacted hospital’s borrowing cost. 

It is important to note that there would still be the risk of revocation of ACA and if so it will affect the ACA’s long-term bonds. 

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