The Supreme Court affirmation last week of key provisions of the Affordable Care Act (ACA) may unleash spending on health-care construction, which has been “moribund” since the law’s 2010 signing, according to Alex Carrick, chief economist with CMD.
“A cloud of confusion, and uncertainty as to the Act’s legitimacy, has been one key factor holding back investment,” Carrick writes in a recent post at CMDGroup.com.
In fact the current six-month average for the value of health-care construction put in place (through April, 2015) is 20% below the average annual rate over the same six months from 2008 and 2009, before the Obamacare debate began to rattle health-care facilities planning in the U.S.
“With two defeats before the highest judiciary in the land – one concerning ACA’s legality under the constitution and the other testing the use of tax subsidies to pay premiums in states not fully on board − the future of a public health-care system in America is appearing more secure,” says Carrick.
“In the event of a Republican being elected President in 2016, there will no doubt be significant adjustments to the program now in place,” he adds, “But a total repeal has become less likely.”
As medical-care facility operators make capital-spending decisions in to a more stable environment, contractors should look for more opportunity in the health-care sector.
The U.S. Department of Commerce most recently estimated the annual rate of health-care-sector construction spending to rank No. 8 among 16 nonresidential sectors, at $39.6 billion. Spending in the health-care sector has been equal to that of transportation (minus highway and street construction).