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Medicaid Ruling Creates Major Budgeting Problem

Karen Minich-Pourshadi, for HealthLeaders Media, July 2, 2012

The U.S. Supreme Court's two-step—affirming the constitutionality of the Patient Protection and Affordable Care Act while striking down expanded Medicaid coverage—puts CFOs in a budget planning pickle.

They won't know who their payers are until online insurance exchanges are established, how many people will be on plans, or how their charity care and bad debt will be influenced. Some healthcare leaders say the Supreme Court decision will change little in their strategic plans, but it's hard to create a long-term strategic plan when you can't project revenue with any kind of accuracy even two years out.

Currently, 60 million people are enrolled in Medicaid, and the expansion would have added another 17 million to the rolls. Prior to the ruling last Thursday, the PPACA called for the uninsured to be covered by requiring states to expand Medicaid to those earning less than 133% of the federal poverty level. It was an increase the federal government planned to cover fully from 2014 to 2016 (though later coverage would fall to just 90% of the cost of expansion and states would need to make up the difference).

The law would have allowed the government to withhold all Medicaid money to states that didn't go along with its coverage expansion. In addition, the PPACA called for the creation of new subsidies to help people at slightly higher income levels afford private insurance on new insurance exchanges.

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2 comments on "Medicaid Ruling Creates Major Budgeting Problem"


David Andrews (7/3/2012 at 9:32 AM)
This article makes a good point. Michigan is faced with covering another 1 million people under expanded Medicaid. I suppose this could be done if the prisons are closed and school funding is cut. Hospitals are covering these people now as a write-off very expensively with no preventive health. Will hospitals start paying the Medicaid premiums to offset the write-offs?

S Harbaugh (7/2/2012 at 3:07 PM)
I am completely amazed that we have so many healthcare "leaders" looking at the issue of Obamacare from a completely myopic, selfish viewpoint of how their individual organizations will benefit or not benefit from the law! What about the concept of Constitutional limitations on federal power? What about the loss of individual liberty? At the end of the day, hospitals are going to saddled with even more federal regulations, reporting requirements, and mandates. No state that is governed by competent leaders is going to willingly sign-up for an expansion of Medicaid when they cannot accurately forecast the increased cost, in addition to having to pay 90% of these costs after 3 years. Rather than being homers for the current administration and not wanting to rock the boat, the AMA and HFMA might want to re-focus their energies on standing up for what is right, rather than for what is expedient.