NEW YORK--(BUSINESS WIRE)--Fitch's ratings on health insurance and managed care companies are unlikely to change directly as a result of Thursday's U.S. Supreme Court ruling on the Patient Protection and Affordable Care Act (ACA). We have not made any ratings changes as a function of today's decision and feel that a knee-jerk response would be inappropriate. In terms of the operating and credit profiles of companies in the health insurance sector, the near-term impact of the court's decision is minimal and the ultimate impact is uncertain and will unfold over the longer term, driven by a combination of subsequent legislation and structural change.
We believe the near-term impact (12-24 months) to be neutral, as expectations for future market conditions and financial performance are unchanged. Our long-term view is that the industry faces challenges, given the uncertainty surrounding various aspects of ACA that have yet to be fully implemented and how they will affect the market.
We note that, since various portions of ACA were implemented, no meaningful change in financial results have registered, further supporting our view that near-term affects are neutral. Our view remains that health insurance and managed care companies will continue to be viable, underscored by their proven effectiveness in reacting to marketplace changes and managing the significant regulatory risks they have faced for years.
We believe that, as the healthcare system continues its struggle to manage costs, margins will be under pressure. Still, considering pressured levels, we think earnings and interest coverage are likely to remain supportive of current ratings levels for the next 12-24 months.
Additional information is available on www.fitchratings.com.
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