Study: Not expanding Medicaid could hurt hospitals

WSFA TV, Nov. 4, 2013

According to a report published by Fitch, the international credit and bond rating agency, the states that opt not to expand Medicaid under the Affordable Care Act could eventually spend more on uncompensated care on their respective uninsured populations.

The authors of the study concluded that two key factors will contribute to the losses of funds for hospitals in the 25 states that have chosen to refuse additional billions of federal dollars to fund Medicaid expansion.

[DOCUMENT: Fitch Medicaid Study (.pdf)]

The first reason that authors cite has to do directly with the decision not to expand. Since the United States Supreme Court ruled the Medicaid expansion mandate unconstitutional, that left the decision directly in the hands of governors across the country whether to expand Medicaid. Medicaid is funded by both state and federal sources, but is managed by the states. Under the ACA the federal government will cover the entire cost of Medicaid expansion for the first three years, decreasing its commitment to not less than 90% by 2020. States would have to make up the difference.

The second reason has to do with the fact that there are changes coming, cuts, to the way the federal government reimburses some Medicaid expenditures would could lead to less revenue for hospitals in the states that don't expand. The states that have opted to expand Medicaid won't feel the impact because those losses are covered by the gains made by expanding their programs.

"We have hospitals that don't know what their futures hold" said Danne Howard with the Alabama Hospital Association.

Howard says that hospitals in the state are already cash-strapped and the reduced reimbursements from Washington will make it more difficult to provide adequate levels of care.

"As it is now, Alabama hospitals have the lowest charge in the country for hospital stays and in the same token we have the lowest reimbursement rate" Howard added.

Alabama could stand to gain approximately $1.2 billion each year for three years if the state was to expand its Medicaid program. With the new eligibility requirements laid out in the law, approximately 300,000 Alabamians would be eligible to receive their insurance through Medicaid expansion according to several studies including those authored by the Kaiser Family Foundation and economists the University of Alabama-Birmingham Medical Center.

Alabama's Governor Robert Bentley has repeatedly said the he refuses to expand Medicaid because Alabama's program is a "broken system." In recent months the governor has said that he hopes to never expand Medicaid and to instead get enough people employed in the state of Alabama so that there is no longer a need for them to be covered by government subsidized healthcare.

Howard with the AHA said in her view that the premise of the Affordable Care Act was to decrease the number of uninsured Americans and decrease the cost of uncompensated care in the states. She says by not expanding Medicaid, it puts hospitals in a very difficult position to come up with ways to fund those services for the uninsured in Alabama where so few people have obtained new health insurance coverage.

"We are looking at Alabama's hospitals providing an additional $525 million in uncompensated care in 2014 so what in essence is happening is Alabama citizens are paying tax money that other states are using to provide coverage to their citizens" Howard said.

The deadline to expand Medicaid and receive funds for the first part of next year is January 1, 2014.

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