Thursday, April 4, 2013

State Budget Cuts and Hospitals

There has been much talk about the state budget cuts to hospitals. 
It's confusing.
When I asked State Rep Betsy Ritter about it a month ago, she said even the experts aren't sure what the final impact will be.
In a nutshell, the Affordable Care Act (Obama Care), calls for an increase in the number of patients who will have insurance and a decrease in the compensation hospitals get to treat uninsured patients. (DSH payments)  In theory, they balance.  The real question, and disagreement, is in whether or not they balance.
To make matters more complicated, part of the equation includes an increase in people on Medicaid, and last summer, the Supreme Court ruled that the federal government could not force states to do this.
In states that have decided not to expand Medicaid, the hospitals will see a decrease in funds for uninsured, and no increase in the number of people on Medicaid, a double whammy.
Luckily, Connecticut is in the forefront of both expanding Medicaid and setting up a "health exchange" where people who make too much for Medicaid will be able to purchase insurance with premiums based on income.
The "Healthy Chats" that you see advertised are information sessions and information gathering sessions on just this.  I have attended 2 of these, have learned a lot, and have made contact with the people on the exchange.
OK, maybe it's not a "nutshell". 
I said it was confusing.
Bottom line, hospitals will get less money for uninsured patients but will see less uninsured and whether they balance is the million dollar question.
I have included the conclusion of a study on this issue from the
Urban Institute’s Health Policy Center, funded by the Robert Wood Johnson Foundation. If you would like to see the entire study, I am happy to email it to you.

Federal lawmakers who passed the ACA offered hospitals an implicit bargain: help fund the ACA’s coverage expansions by giving up some Medicaid and Medicare reimbursement, and in return receive new revenue when formerly uninsured patients enroll in Medicaid or private coverage.

Last June, the Supreme Court placed the fate of this implicit bargain in state hands. Regardless of what each state decides, its hospitals will help pay for the ACA. But whether hospitals receive the ACA’s promised financial rewards depends on state decisions about Medicaid expansion. Although expansion would reduce hospitals’ private payments, the accompanying boost to Medicaid revenue is over 2.5 times the size of those losses in the average state, even without considering the potentially significant benefits of hospital-based presumptive eligibility in further reducing uncompensated care burdens.

Put simply, hospitals’ financial pain from the ACA remains mandatory. But the extent of their offsetting gains now depends significantly on whether state leaders decide to expand Medicaid.