The federal government is continuing to debate a response to the looming debt limit deadline, and, should that ceiling be breached, it has significant implications for the healthcare industry.
Analysts at Moody’s Investors Service estimated the government will run out of money to pay its debts by June 8, which is consistent with projections from the Treasury Department and the Congressional Budget Office.
The analysts assigned a 10% possibility to a debt ceiling breach, according to the report.
For healthcare, a major consideration is Medicare and Medicaid payments from the federal government, according to the report. Medicare alone accounted for 26% of spending on hospital care as well as 26% of physician and clinical services in 2021, according to a January analysis from KFF.
In the short term, providers, particularly those in rural areas, would have to stretch their already limited financial wiggle room to account for delays or cutbacks in payments as the government focuses on covering its debts, Fierce Healthcare reports.
If the breach were to stretch on, it could lead some providers to cut back the number of Medicare and Medicaid patients they treat, the analysts said. The Veterans Affairs health system, which is operated by the federal government, could also suffer in an extended debt ceiling breach. Read more.
