Affordable Health Care Act to increase number of insured Americans by 36 million

Dec 2 2009

According to Fitch Ratings' Fall U.S. Healthcare Sector Legislative and Regulatory Register, the Affordable Health Care for America Act of 2009 (H.R. 3962) passed by the House of Representatives on Nov. 7, 2009 will generally increase the number of insured Americans by 36 million through individual and employer mandates, coupled with a number of subsidies offered to lower-income individuals and smaller employers. Fitch says it is reasonable to assume that increased coverage will lead to an increase in the number of admissions, procedures, tests, device implants and prescriptions. While President Obama and Congress remain focused on addressing the issues of the uninsured and healthcare reform, it is difficult to predict the timing and ultimate outcomes of these initiatives.

'While H.R. 3962 will benefit a large number of the uninsured, Fitch recognizes there are concerns regarding the financial impact of the bill on the healthcare industry,' said Robert Kirby, Director at Fitch. 'The establishment of a government or quasi-government insurance program could shift some members out of private insurance plans into a government plan.'

H.R. 3962 relies on both the public and private sector to offer health insurance coverage. Many of the revenue provisions will begin upon enactment, while most of the benefits will start to be phased in beginning in 2013.

According to Fitch, the government plan would likely reimburse industry participants at rates significantly less than the private plans' rates, potentially squeezing margins and influencing utilization. The establishment of a comparative effectiveness research center (CERC) may eventually improve treatment outcomes. However, the primary concern of some people is whether it will ultimately evolve into a gatekeeper for reimbursement and/or rationing, and ultimately hamper the margins and R&D efforts of innovators (pharmaceutical manufacturers and medical device manufacturers).

The special report, 'U.S. Healthcare Sector Legislative and Regulatory Register - Fall 2009' is now available at www.fitchratings.com.

SOURCE Fitch Ratings