Why hospitals (heart) the Medicaid expansion

July 3, 2012

If one industry can claim to have the most riding on states participating in the health law's Medicaid expansion, it's near-certainly hospitals. They have nearly $40 billion riding on whether states sign up or not.

Hospitals regularly get stuck with bills that the uninsured cannot afford to pay. Every year, the American Hospital Association adds all those bills up to calculate the total amount of uncompensated care that its members provide. Every year, the number gets bigger and bigger, hitting $39.3 billion in 2010. Here's a chart I put together with the AHA data:

Under the health reform law, hospitals will see reductions in some of their Medicare reimbursement rates. They will be forced to deliver higher quality or see financial consequences.

All of that was worth it, in hospitals' eyes, because of the insurance expansion. That would finally put someone on the hook for the medical bills that have, for decades, gone unpaid.

If states opt-out of the Medicaid expansion, that essentially means there's no one on the hook for some of the poorest patients. And that explains why Bruce Siegel, president of the National Association of Public Hospitals, calls states opting out a "potentially disastrous outcome" and is urging Congress to come up with a fix. For them, the status quo is the worst possible outcome: One where they have accepted cuts to Medicare, and still get stuck with billions in unpaid bills.

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Sarah Kliff · July 3, 2012