Medicaid Expansion Puts Bottom Line on Borrowed Time

In addition to the decision states are making on Medicaid expansion, there's another matter CFOs need to pay attention to: a substantial number of employers could drop insurance coverage altogether in your state. Already, 10% of employers have dropped insurance coverage in the last decade for no other reason but cost, and another 10% could drop it in the next ten years, says Paul H. Keckley, PhD, executive director at the Deloitte Center for Health Solutions in Washington, D.C. That means more people will have to find insurance coverage on their own or through the federal insurance exchange program. That can come out hospitals' bottom line. People seeking independent coverage tend to select high-deductible, high-copay plans that put a large chunk of hospital or health systems money at risk for going unpaid. Bad debt isn't good for the balance sheet.

Regardless of which path a state takes on Medicaid expansion or the rate at which state insurance exchanges reimburse for coverage, ultimately CFOs must count on cutting costs and proving value for their organizations to survive and thrive.

"We have to demonstrate quantifiable value for the consumer and the employers now. Folks aren't happy with their care and the costs are running away," says Keckley. "I tell [executives] we're living on borrowed time … to fix this we're going to have to go big or get out. People need to develop new models to fix this, and they must be ready to throw out the sacred cows to find savings."

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