Obamacare Hurting Hospitals Even In States with Expanded Medicaid

One of the many promises made by Barack Obama about his flagship legislation was that it would improve the financial wellbeing of hospitals.

Under the old program, the federal government paid states 50% of their costs for Medicaid. Under Obamacare, they promised to pay states 100% of the cost of Medicaid for the first three years for those that expanded their Medicaid coverage in connection with the Affordable Care Act. After the three years, the feds would pay 90% of the Medicaid costs.

Even though that sounded great, twenty-two states made the decision not to expand their Medicaid coverage. At the beginning, the feds threatened to withhold federal money for their existing Medicaid if they didn’t expand, but the states called the feds’ bluff and took the issue to court. The court ruled in favor of the states and told the feds that they could not use extortion tactics to force them to comply with the feds’ desire to have them expand their Medicaid coverage.

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However the feds continued to put pressure on those 22 states by warning them that hospitals would suffer financially by the decision to not expand their Medicaid programs, but the states still would not budge. By expanding their Medicaid programs, hospitals would recoup a large amount of their uncompensated care costs because more people would be covered under Medicaid. They also promised hospitals that the number of emergency room visits would drop because more people would be covered under Medicaid. That also turned out to be untrue as the number of emergency room visits have remained just as high in some hospitals and continue to rise in many others.

To support the feds’ claims of how Medicaid expansion would help hospitals financially, they produced figures indicating that uncompensated costs at hospitals in the US last year dropped by $7.4 billion. The report also indicated that the Medicaid expansion states accounted for $5 billion of that drop.

If you look at a recent Moody report, you would realize the truth behind the feds’ report. Moody found that when it came to actual earnings, hospitals in states that expanded their Medicaid programs did not fare any better than those in states that did not expand their Medicaid programs.

Yes, hospitals in Medicaid expanded states did see a 13% drop in their operating costs, but that drop was offset due to the way the feds reimbursed them. Those hospitals reported that under the expanded Medicaid program, that even though the feds are paying for more patients they are paying less per person.

An example given was a hospital in Illinois who saw a decrease of $9 million in their unpaid bills from the year before. However, their total Medicaid costs were $28 million and the feds only reimbursed them for $14 million. The bottom line is that the hospital has a net loss of $5 million over the previous year due to Obamacare’s expanded Medicaid program.

Many doctors have also been reporting that Obamacare is paying them less than what they should be getting. This has led to many doctors closing their private practices and either joining medical groups or leaving the medical field all together. Couple that with the drastically rising healthcare premiums; loss of subsidies; millions of Americans having their hours slashed by 25% and losing their employer provided healthcare benefits and more; it seems that Obamacare has been a program rife with broken promises. It reminds me of the lyrics to an old country western song:

“Promises, promises, that’s all I ever get, that’s all I ever get.”



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