President-elect Barack Obama's plan to extend healthcare to uninsured Americans will be beneficial to hospitals, medical centers and hospital equipment makers, according to Moody's Investors Service.
Moody's estimates that the annual cost of the plan could be on the order of $100 billion to $200 billion, inclusive of participant contributions, on top of current annual government spending of about $800 billion," the rating agency said in a report this week.
The New York-based rating agency said the Democratic party's healthcare agenda includes increasing research funding and providing $10 billion over five years to healthcare providers for adoption of healthcare information technology.
"The expected spending could positively affect the top-line growth of many healthcare providers," the report speculated.
The agency predicted that both for-profit and non-profit hospitals could benefit from Obama's plan.
The Obama plan will raise some revenue by taxing larger employers that do not offer health coverage, Moody's said. Because the plan would increase the number of insured patients and the amount of reimbursements for care, hospitals could benefit directly and indirectly.
"The improvement would be direct, through reimbursements, as well as indirect, if more people seek primary-care treatment in a more-appropriate setting such as a physician's office or a clinic, for example, rather than in an emergency room," Moody's said. "This would free capacity and reduce pressure at hospital (emergency rooms), many of which are operating well above capacity."
The agency also predicted some negative effects on hospitals and insurers.
The Obama plan's mandate to coordinate care through improved healthcare IT and provisions to tie payments for Medicare to performance may impose greater costs.
"Hospitals could find themselves in tougher contract negotiations with insurers that may experience tighter margins under the Obama plan," Moody's said. "Lower rates of reimbursement growth could, in turn, put new pressure on hospital margins."
The agency warned that Obama's healthcare plan might take years to implement as the nation recovers from economic distress and a growing deficit.