Hospitals pay big price for lack of Medicaid expansion

But providers in expansion states reaping benefits
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In the 20 states that have yet to expand Medicaid eligibility under the Affordable Care Act, lawmakers and other leaders say they have taken the fiscally prudent path by not accepting federal funds and not having to pay any matching funds for expansion.

But there is a constituency that's paying a steep price for this decision-making: local and regional hospitals, and often facilities that serve the public.

A particularly sharp contrast is occurring between Illinois, an expansion state, and Georgia, which has not expanded eligibility. In the former, the Cook County Health & Hospitals System has reported its first profit in 180 years of operation, Reuters has reported. But Georgia-based Grady Health System continues to struggle financially and remains dependent on some extent to the philanthropy from the locals.

"Providers in these (non-expansion) states are going to be at a disadvantage," Jim LeBuhn, senior director at Fitch Ratings, told Reuters. "It's going to make it that much more challenging for these providers to maintain their financial profiles."

According to Reuters, patients in expansion states also are likely to be far more stable medically than their counterparts, with a large number of them assigned their own doctor and receiving regular medical care. That suggests such patients are less likely to obtain care at hospital emergency rooms as a matter of routine.

A study by researchers at Northwestern and Columbia universities concluded that the cost of providing charity or uncompensated care for patients who would have had Medicaid coverage in an expansion state outstrips the cost savings associated by not expanding the program.

As a result, the extensive study has concluded that many hospitals in non-expansion states--particularly those that serve large safety net populations--are often considered "insurers of last resort."

However, Medicaid expansion has not been a complete financial godsend to hospitals, with some data indicating that while it helps alleviate bad debt, it does little to improve operating margins.

To learn more:
- read the Reuters article 
- check out the Northwestern/Columbia study (.pdf)

Related Articles:
For non-Medicaid expansion states, charity care wipes out savings
Medicaid expansion helps bad debt but not operating margins
Hospitals reap rewards of Medicaid expansion 
States that expanded Medicaid saved millions