Threat of ACA repeal impacts hospital bonds


Hospital leaders, already anxious over the potential repeal of the Affordable Care Act, may soon find going to market to borrow money far more challenging than in the past.

The election of Donald Trump as president has immediately placed hospital debt--some $250 billion of it nationwide--into the headwinds, according to Bloomberg.

And hospitals are already beginning to feel the pressure.  A bond issue of Michigan-based Trinity Health Corp. slated to mature in 2045 rose to a 1.77 percent yield, up from 1.20 percent point a month ago. The higher-rated Providence St. Joseph's debt in California and Washington state rose about 0.15 percent, according to the article.

California bond issues had already come under pressure as the bulge of enrollments under the ACA had waned in recent years. Although 2016 and 2015 were quite stable for the nonprofit hospital sector, Fitch Ratings had recently forecast turbulence in the years ahead--and that was before Trump's upset victory.

“There’s a clear indication that Obamacare benefited a lot of hospitals,” Mikhail Foux, head of municipal strategy at Barclays Plc, told Bloomberg. “You will probably see weaker systems, especially the ones that are mainly operating in states that have expanded Medicaid, come under some pressure."

But whether the now-GOP-controlled Congress and White House could repeal the ACA wholesale remains to be seen. Some studies have suggested that a repeal of the ACA might mean nearly 20 million Americans could lose their health insurance.