Politicians and the public are still arguing about the relative benefits of the Affordable Care Act for the health care system, but public hospitals should be very grateful for the ACA's existence.

According to a study on municipal hospital costs funded by the University of Illinois in Chicago's Government Finance Research Center, since the ACA was upheld by the Supreme Court in 2012, yields for short and medium-term health care bonds have fallen by 39 basis points.

That adds up to $3 million in interest savings per bond issue, totaling $1.74 billion across the economy. The study added that urban and private hospitals derived even more impact.

According to Dermot Murphy, coauthor of the study and a UIC associate professor of finance, there wasn't a whole lot of investor confidence in the beginning. "For all they knew, the ACA might be repealed next month. After the Supreme Court ruling in 2012, however, investors got a shot of confidence that the [legislation] was more likely to remain the law of the land."

Public hospitals get much of their funding from municipal bonds; the study found that $203 billion in health care municipal bonds were outstanding in 2011, and in 2017 alone bonds for hospital financing in the amount of $33.4 billion were issued.

Yield on the bonds fell substantially after the Supreme Court ruling, making it easier and cheaper for hospitals to borrow, and then dropped another 17 basis points in the wake of Medicaid expansion in the states that chose to expand it.

At this point, if the ACA should be overturned, it would end up costing hospitals a lot of money and exacerbate the problem of rural hospitals closing, the report said. A scaling back or reversal of the ACA could result in the reversal of some $6.2 billion in savings for hospitals—and although uncertainty has lessened, it certainly hasn't disappeared.

The authors of the study wrote, "The numerous repeal efforts since 2010 suggest that there are significant long-run political risks associated with investing in the health care sector."

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Public hospital borrowing costs plummeted under ACA

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