Medicaid cuts mandated by the Deficit Reduction Act have not been “materially harmful to the credit strength of not-for-profit acute care hospitals” so far, said Moody’s Investors Service in a special comment. But as future Medicaid cuts are likely--and greater amounts of charity care provided by hospitals as a result--Moody’s says the long-term credit impact of Medicaid reform is “uncertain.”
Fortunately, Medicaid cuts will not have a dramatic effect on most hospitals, since Medicaid represents only 10.5% of gross patient revenues for the typical not-for-profit hospital, according to Moody’s. And the DRA allows states greater latitude to reform their Medicaid programs, although the effect of those initiatives are not yet known. The report explores the credit implications of several states’ Medicaid reform efforts and includes a reference chart with various Medicaid statistics and Moody's ratings by state. For more information about this special comment, call 212-553-1653.
