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Limited Service Hotels are, well…limited!

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TrumpCare and the Effect on Healthcare Commercial Real Estate Market

By Kevan McCormack Since Donald Trump has taken office as President of the United States, he has been very busy “making good” on his campaign Read more

What is the TRUMP Effect on Commercial Real Estate? 4 Key Points

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What is PACE Financing?

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Risk Retention, Risky Business?

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It’s Senior Living Not Senior Dying

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Metropolitan Capital Advisors Arranges A $4,700,000 Construction Loan For UC Health Emergency Room (Arvada)

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trumpcare

TrumpCare and the Effect on Healthcare Commercial Real Estate Market

By Kevan McCormack

Since Donald Trump has taken office as President of the United States, he has been very busy “making good” on his campaign promises in one of the most active “100 Days” in history and 46 million American who are 65 and older are paying attention!

There has been much talk of repealing the not so “Affordable Care Act” (“ACA” and aka ObamaCare) and many are confident this will happen, eventually.  The tricky part of it is simply a problem of optics and short term memories…call it ‘Dementia of the Masses’.  The law was sold on the basis of stopping rapid premium growth and reigning in healthcare costs.  However, most Americans intuitively know that ACA is massively unaffordable and that premiums are still rapidly increasing for a majority of Americans.  While everyone is required to have healthcare, it is not necessarily the healthcare they require.

The core of the problem has to do with two closely related concepts: firstly, the ‘Individual Mandate’, whereby everyone has to purchase qualifying health insurance otherwise pay a penalty; and, secondly the ‘Pre-existing Condition Exemption’, which prohibits a health insurer from denying an individual insurance based on a pre-existing condition.  These two concepts form the core of the law.  You can’t have one without the other.  There is concern that Congress might make the massive mistake of getting rid of the Individual Mandate provision while still forcing insurers to ignore pre-existing conditions.  This will trigger a very dangerous relationship in Economics Game Theory known as ‘Adverse Selection’ that will certainly destroy the industry!

Can Congress simply repeal the entire law?  Sure they can, but wholesale repeal is very unlikely given Congress’ history and because buried deep in the law are a few actually useful pieces of legislation regarding digital medical records and reducing waste, fraud and abuse.  Rather, Congress will steadily dismantle it in order to reduce negative ripples in the press and the marketplace.  But most importantly, Congress is likely to address the Individual Mandate problem in unison with the pre-existing condition provisions.  Pulling out the knife hurts as bad or worse as getting stabbed in the first place…but it is the first step to fixing the problem!

Outside of healthcare, Trump has promised a few other popular initiatives that seem likely to occur.  These include eliminating the Estate Tax and reducing income taxes while simplifying the U.S. Tax Code.  The Estate Tax seems easy, it is double taxation period (hence Unconstitutional), and simplifying the Tax Code is something that most Americans want.  Just imagine the day that we can pay our taxes based on a simple system where everyone pays a fair percentage of their income!  Maybe these good things will happen before the healthcare bills kick-in for our aging citizens!

When developing your next Healthcare facility will be helpful to have a finance partner who is well-versed in all aspects of the healthcare market.  MCA has been financing Healthcare and Senior Living facilities for over 20 years.  To discuss the financing of your next project, contact Kevan McCormack at kmccormack@metcapital.com.

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