| Bonds Online |
 |
|
| 5/10/2013Market Performance |
| Municipal Bonds |
|---|
|
S&P National Bond Index
|
3.00% |
|
|
S&P California Bond Index
|
2.96% |
|
|
S&P New York Bond Index
|
3.13% |
|
|
S&P National 0-5 Year Municipal Bond Index
|
0.70% |
|
|
| S&P/BGCantor US Treasury Bond |
400.09 |
|
| More |
|
| Income Equities: |
|---|
| Preferred Stocks |
|---|
|
S&P U.S. Preferred Stock Index
|
848.03 |
|
|
S&P U.S. Preferred Stock Index (CAD)
|
636.26 |
|
|
S&P U.S. Preferred Stock Index (TR)
|
1,701.05 |
|
|
S&P U.S. Preferred Stock Index (TR) (CAD)
|
1,276.26 |
|
|
| REITs |
|---|
|
S&P REIT Index
|
174.07 |
|
|
S&P REIT Index (TR)
|
425.30 |
|
|
| MLPs |
|---|
|
S&P MLP Index
|
2,469.58 |
|
|
S&P MLP Index (TR)
|
5,428.50 |
|
|
See Data
|
|
|
|
 |
|
|
|
|
|
|
Will California And Massachusetts Lead The Way In Health Care Reform? |
NEW YORK Oct. 24, 2007--Health care analysts took a jaundiced view of how various proposals for health care reform being considered by the U.S. might affect ratings among hospital, pharmaceutical, managed care, and other health care sectors, at Standard & Poor's Ratings Services' Hot Topics Conference, "Politics And Leverage May Be Hazardous For Health Care," on Oct. 22, 2007.
Specifically, the four panelists, Standard & Poor's credit analysts Michael Kaplan, Martin Arrick, David Peknay, and Shellie Stoddard took an in-depth look at the recently established universal health care plan in Massachusetts and the proposed one in California for clues about how federally backed universal health care, if enacted, might play out. The cost, quality, and availability of health care insurance are the leading domestic issues in the upcoming presidential election (see "Do Massachusetts Health Care Reform And California Proposals Foreshadow A National Plan?" published Oct. 12, 2007, on RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis).
The Massachusetts experiment is already underway, yet there are many unresolved questions about its ability to act as a national template. "Massachusetts has created a lot of excitement," said Mr. Arrick, "but from where we sit, the jury is still out." He noted that the state's situation might be unusual in that it still had significant cash for the plans from its state hospital pool for uninsured patients, its uninsured rate was relatively low, and it was under some pressure to come up with a plan before it lost certain federal funds. The universal plan in Massachusetts also has a provision in which employers must pay in to the state if they do not offer employee coverage: The twist is that what they pay likely will be less than what insurance costs, so there may be incentive for them to shift the burden of providing coverage to the state. Moreover, the lessons for managed care companies could well be different nationally than in Massachusetts, because of the nature of the market there.
"It's a different insurance market there than it is nationally, because with three local non-profit insurers dominant, it's easier to work with. That's a different dynamic than you'll find in California," said managed care credit analyst Shellie Stoddard. As to the viability of the Massachusetts plan overall and its impact on many rated companies, analysts believe it may take a year to fully grasp, following the release of state audits and individual company reports. In any case, since for-profit hospitals are scarce in the state, the impact on the rated chain operators would be negligible.
In California, Gov. Arnold Schwarzenegger is trying to put together a universal health care plan for the nation's most populous state--a move complicated by the state's diverse demographic, with a large number of both legal and undocumented immigrants, a far more diverse network of health care providers, and a greater mix of for-profit and not-for-profit hospitals and managed care companies. Some of the crucial issues will be how hospitals are reimbursed for indigent care and how employers will look at, in one proposal, a 7.5% payroll tax to fund the universal care.
Certainly, the panelists agreed, any source of funding for health care providers that depended on one single source would be a concern. In the years following the federal Balanced Budget Act, for example, Medicare funding was cut dramatically for nursing homes in California and elsewhere, sending the ratings on many care providers into sub-investment grade territory or even default. "A key driver in the for-profit hospital sector has been the rates paid by private insurers," said Mr. Peknay. "How they react to any reform will be a critical element."
Of course, what other income hospitals receive also will be crucial. The mix of privately insured, publicly insured, and uninsured patients undeniably will have an impact on the large for-profit hospital sector in California. Because the non-profit hospital sector in the state is generally in good shape, those hospitals are expected to retain investment grade ratings under any universal health care plan. "Non-profit hospitals are predominantly investment grade," said Mr. Arrick, "and additional leverage is not the issue. Many have room to reduce the margins and retain their rating."
Universal health care in California also raised another important issue: Whether hospitals will be able to deal with a new flock of patients that could now afford to use them. "There is the potential for a spike," said Mr. Peknay. That could prove problematic for hospitals, as it would require new hiring of medical and support personnel that would raise labor costs and eat into margins. In itself, that would be a negative, but how--or if--it would be offset by additional revenue from the state or insurance payments is uncertain.
No one, of course, is sure what form health care reform will ultimately take on the national level. There is, according to most polls, an excellent chance that the Democrats will increase their representation in Congress next year, and that next president could be a Democrat. That makes the possibility of universal health care more real than it has been in many years. In recent years, the states have shown themselves to be valuable laboratories for experimentation. Next year, it may be Washington's turn.
|
|
|
|
|
|
| Partner Market Place |
|
|
|
| Stuff to look at |
Yield and Income Newsletter: A must have for income investors. subscribe NOW
S&P Commentary and Newsletters: S&P
|
|
| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
Keep up with monthly, in-depth coverage of fixed income market strategies, commentary, and insights as seen by our sources. Sign up for the free BondsOnline Advisor now!
Unsubscribe here [+] |
|
|
|
|
