New York, November 07, 2012 -- The re-election of President Barack Obama is a neutral event for the credit quality of the not-for-profit hospital industry, says Moody's Investors Service, as President Obama's healthcare policies have already been factored into the sector outlook. With the President's re-election, the individual mandate provision of the Patient Protection and Affordable Care Act (PPACA) has a greater chance of being implemented, which Moody's has previously noted is a discreet credit positive for the sector. But PPACA overall remains a net negative overall for not-for-profit hospitals, which Moody's captures in its current negative outlook for the sector.

"Significant ambiguity remains with the future of federal healthcare policy given the scope of the federal deficit," says Brad Spielman, a Moody's analyst who authored the report "The Re-Election of President Barack Obama is Credit Neutral for Not-for-Profit Hospitals." "This uncertainty continues to heighten credit risk in an already pressured operating environment," said Spielman.

Key long-term credit negatives embedded in PPACA include the $150 billion in reduced Medicare reimbursement to the hospitals over the next 10 years and $14 billion of Medicaid disproportionate share cuts. The law also will introduce new payment models intended to lower reimbursements to hospitals even further.

On the positive side, Moody's notes the individual mandate of PPACA is in much less jeopardy with President Obama's re-election. Because PPACA requires individuals to obtain health insurance starting in 2014, it is likely to decrease the rolls of uninsured patients appearing in hospital emergency rooms, reducing the cost of uncompensated care.

Although President Obama's reelection increases the chances that most of PPACA will be implemented, significant uncertainty remains over healthcare policy and healthcare funding because of sequestration, says Moody's. Even if the administration brokers a deal in the next two months that negates sequestration, which requires a 2% reduction in Medicare payments, the size of the federal deficit will continue to pressure lawmakers to reduce federal spending on Medicare and other healthcare programs.

Moody's research subscribers can access this report at http://www.moodys.com/research/Re-Election-of-President-Barack-Obama-is-Credit-Neutral-for--PBM_PBM147114.

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Bradley E. Spielman Vice President - Senior Analyst Public Finance Group Moody'sInvestors Service, Inc.One Front Street Suite 1900 San Francisco, CA 94111 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653John C. Nelson MD - Public Finance Public Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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