05-13-2020 Council Packet - Laserfiche WebLink

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30 factors. Further, to offset the cost of expanded health care coverage and implementation of reform, the ACA includes cuts in Medicare reimbursement and increased taxes. The ACA reduces payments for services to federally-insured patients because Congress expects that the base of consumers for health care services will expand (in tandem with a reduction in the uninsured health care consumer base), and as a result, providers will realize savings in bad debt and charity care expenses. While an increase in utilization of health care services by those who are currently avoiding or rationing their health care can be expected, the net impact of such an increase in utilization of health care services is difficult to predict due to the rates of reimbursement under the Medicaid and Medicare programs, which could be further reduced. Also associated with increased utilization will be increased variable and fixed costs of providing health care services, especially in the specialties necessary to provide critical intervention or chronic disease management (e.g., primary care). The constitutionality of certain ACA provisions designed to expand health insurance coverage was recently challenged in National Federation of Independent Business v. Sebelius. While the private insurance mandate has been upheld by the Supreme Court, certain other provisions were found to be unconstitutional. The constitutionality of the ACA continues to be challenged in courts around the country and has been the subject of Congressional sessions and various proposed amendments. The ultimate outcomes of any legislative attempts to repeal, amend or eliminate or reduce funding for the ACA are unknown. The ACA also contains more than 32 sections related to health care fraud and abuse and program integrity as well as significant amendments to existing criminal, civil, and administrative anti-fraud statutes. Increased compliance and regulatory requirements, disclosure and transparency obligations, quality of care expectations, and extraordinary enforcement provisions that could greatly increase potential legal exposure are all aspects of the ACA that could increase Borrower’s operating expenses. President Trump has publicly stated, along with leaders of both the United States Senate and the United States House of Representatives, that he intends to repeal the ACA. Any possible repeal or substantive changes to the ACA cannot be known at this time. Any substantive changes to the ACA could have the result of increasing the number of uninsured persons, imposing maximum benefits for certain residents, removing coverage for certain conditions under health plans, repealing Disproportionate Share Medicare payments, or otherwise change the eligibility of certain residents. Funding of the Limited Guaranty and Limited Nature of Limited Guarantor’s Obligations. The Limited Guarantor’s obligations under the Limited Guaranty is an unsecured general promises to pay by the Limited Guarantor and there is no priority of payment between the Limited Guaranty or any other unrelated guaranty agreements to which Limited Guarantor is a party. No assurances can be given that, at any particular time, the Limited Guarantor, as guarantor, will have sufficient liquid resources to meet any payment obligations that may arise pursuant to the Limited Guaranty. Under the Limited Guaranty, the Limited Guarantor is not required to maintain any minimum net worth or otherwise comply with any substantive financial covenants. Accordingly, the ability of the Limited Guarantor to make payments required under the Limited Guaranty entered into in connection with the issuance of the Series 2020 Bonds may be materially different in the future. The Limited Guarantor’s audited financial statements for its Fiscal Years ended September 30, 2019 and 2018 are included in APPENDIX C to this Official Statement. The Limited Guarantor is engaged in a number of activities unrelated to the Project and has incurred liabilities, including guaranties, in connection with other operations. See “APPENDIX A - THE BORROWER, LANGSTON SHORES, AND THE LIMITED GUARANTOR” in this Official Statement for a more complete discussion of the operations of the Limited Guarantor. There can be no assurance that such other operations will continue to be