AZ Hospitals See Benefits of Medicaid Expansion

Year-to-date operating margins have improved from $140 million in 2013 to $184 million in 2014, an Arizona Hospital and Healthcare Association survey finds. And there's been no mad rush to emergency departments, as many had predicted.

For the most part I try to avoid writing about the politics of healthcare in this column. Frankly, there are plenty enough sources to cover that angle, and talking about the partisan aspects of "Obamacare" tends to bring out extremists on both sides of the issue, with everyone intent on generating more heat than light.

It's hard to stay apolitical, however, when it comes to the Medicaid expansion. That's because it was partisan politics by some governors and legislators in some states to reject the additional hundreds of millions in federal dollars that would cover health insurance costs for millions of people who could not afford it otherwise.

Because most states have seen the no-brainer wisdom of accepting Medicaid expansion and embracing health insurance exchanges, the percentage of uninsured people in the United States continues to hit record lows.

The excuse in those states that have rejected the expansion is that they cannot afford to take up the new entitlement once the federal government begins to scale back on its share of the funding.

On its face that's a specious argument and reeks of political cover.

Under Medicaid expansion, which the Supreme Court made optional in 2012, the federal government will pay 100% of the cost through 2016 and 90% of the cost by 2020.

The problem is that those rejecting Medicaid money presume that healthcare is just like any other product, and that the demand will disappear if nobody pays for it. As every hospital administrator understands, however, healthcare doesn't work that way.

The demand will still be there, the uninsured will continue to access their care through the emergency department, and people with insurance and their employers will continue to pay for the "uncompensated care" through "hidden taxes" in the form of higher premiums and cost-shifting.

Rejecting Medicaid expansion only makes sense as a political wedge issue, and it's possible that that calculation could backfire as well. In Georgia, Gov. Nathan Deal, up for reelection in November, has called a special committee to find ways to help the Peach State's struggling rural hospitals, many of which are on the verge of shuttering.

At a recent meeting of the group, however, accepting Medicaid expansion money was not on the agenda. While the people sitting on the committee seem sincere, capable, and committed, the governor's actions provide election year political cover.

Arizona Gov. Jan Brewer, an ardent and vocal opponent of Obamacare, shocked observers in January 2013 when she announced that she would support the Medicaid expansion.

That turns out to have been a good idea. Since Jan. 1, 2014, about 190,000 Arizonians have been covered under the Medicaid expansion, and another 120,000 people gained private coverage.

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'A Significant Drop in Uncompensated Care'
This month, an Arizona Hospital and Healthcare Association survey of 75% of its member hospitals found "a significant drop in uncompensated care" over the first four months of 2014, down from $246 million in 2013 to $170 million for the same period in 2014, a decline of 31%.

In addition, year-to-date operating margins have improved from $140 million in 2013 to $184 million in 2014. The hospitals also have not seen a mad rush to the emergency department by these newly covered Arizonians, as many had predicted.

Of course, Medicaid expansion money won't solve everything. Even with the additional federal funding and the expansion of the private coverage rolls, more than 30% of Arizona's hospitals reported in the survey that they are losing money. And the AHHA survey does not factor in about $230 million in quarterly Medicaid assessment fees that hospitals pay the state of Arizona.

Still, it's hard to demonstrate that the Medicaid expansion been anything other than a net positive for the hospitals of Arizona, just as refusing the expansion money has put many Georgia hospitals on the brink of collapse.

If your hospital is in a state that has rejected Medicaid expansion money, it's not too late to act. It's an election year. Your elected officials and the people who voted them into office must understand the real world repercussions of a purely political decision to reject tens of millions of dollars in healthcare funding that could very well determine whether or not your hospital stays open.