Avoiding Obamacare by Passing the Medicaid Buck to Hospitals

With the enrollment deadline for Obamacare approaching, the Administration's focus has been on convincing the uninsured that they cannot afford to remain uncovered.  But in states that have declined to expand Medicaid, many of these people will remain unable to afford insurance.  And as serious as their plight may be, they are not the only casualties of the political battles.  Hospitals stand to suffer major collateral damage, as well.

When they make financial projections, hospitals plan for the need to provide a certain amount of uncompensated care for patients who are unable to pay.  Some of this cost is recovered from the federal government through Medicare.  However, Obamacare reduced the amount available for these "disproportionate share hospitals" by billions of dollars on the assumption that the cuts would be offset by Medicaid expansion.  The thinking was that since more of the uninsured will have coverage, less hospital care will go unpaid.  Although Medicaid payment rates tend to be much lower than those of private insurance, hospitals would still stand to gain because the lower Medicaid rates would be offset by revenue from the large number of newly insured.

However, Medicaid expansion is optional for the states, and half them have refused to take part.  Sadly, many of the holdout states are the ones that have the most to gain with populations that are among the country's poorest and least healthy.  Some governors in these states have cited the cost of expansion as unsustainable, but with federal money covering 100% of the cost for the first three years, and never less than 90% after that, the decision seems to be more political than practical.

This political posturing is forcing some hospitals, including one in the Philadelphia area, to take measures like cutting staff or services, or shutting down entirely.  Patients who rely on these hospitals could then be forced to travel long distances to obtain necessary care.  To make up the revenue shortfall, some hospitals are even contemplating financial penalties for patients who are eligible for insurance, but fail to obtain it.  These include less generous discounts for self-pay patients and requiring that they enroll in a plan before medical debt will be waived.  Some hospitals may postpone elective procedures until uninsured patients obtain coverage.

Shifting the problem from the legislative floor to the patient floor has left hospital administrators struggling to fill in for the failings of elected officials.  What these officials need to realize is that the cost of Medicaid expansion is not a debate that should be framed in terms of dollars, but in terms of lives.