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When States Reject Medicaid Expansion, Providers, Businesses Will Pay

John Commins, for HealthLeaders Media, March 18, 2013

Goldstein says the soon-to-be-operational health insurance exchanges present another great unknown that could negatively impact finances at safety net hospitals.

"When the insurance exchanges are up and running (on January 1, 2014) we have heard anecdotally that we don't know what those contracts will be between hospitals and private payers," she says. "Are they going to be at Medicare rates or somewhere between Medicare and Medicaid? Are they going to be near commercial rates, which would be the best from a debt repayment perspective? That is an unknown."

And while many small businesses are expected to shuttle employees to the exchanges, Goldstein says it's not clear if big corporations will do the same. "What if a big corporation says 'healthcare costs are unaffordable, we aren't providing healthcare. You 2,000 employees go to your exchanges. Here are your vouchers.' You can see for hospitals that the with composition payer mix of their revenues, there could be a new slice of the pie called exchanges and depending upon what those negotiated rates are that could further suppress revenues."

"So, you've got DSH drying up and an unknown on Medicaid expansion. We know Medicare rates are going down, that is a given, and as we have been saying top line revenue is under pressure," Goldstein says. "Hospital revenues are still in critical condition."

Meanwhile, a separate study examining the effect of the ACA on employers found that states that opt out of the Medicaid expansion will expose businesses within their borders to tax penalties and a higher "shared responsibility" for providing healthcare coverage for employees.

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2 comments on "When States Reject Medicaid Expansion, Providers, Businesses Will Pay"


Todd Madden (3/19/2013 at 1:25 PM)
One should remember that Medicaid reimbursement rates are significantly below hospital costs. To say those losses will not be offset by employers would be disingenous. While there may be more in taxes with the ACA, there will be more cost shifting if Medicaid is expanded. Oh and don't forget the lack of primary care providers to see patients before they go to the ER, further perpetuating the cost shift.

Larry J. Jones (3/18/2013 at 10:25 AM)
I live in Texas. As a taxpayer I take issue with Gov Perry's refusal to accept some of MY tax money back to fund a program of great benefit to our state and myself personally. I have no doubt he has a 'cadillac' health plan paid for by the state. Nor do I see him objecting to the millions (billions?) Of our taxes going to subsidize the oil & gas industry; currently the most profitable business on the planet. Texas has roughly 1/4 of it's population w/o health benefits of any kind. He acts as if he is proud of this!