Two more Medicaid proposals that could shut down hospitals

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Last week, I discussed how Rep. Paul Ryan's proposal to overhaul the Medicaid system could prove disastrous to hospitals. This week, I want to examine proposals by two up-and-coming governors to slash Medicaid spending by about $700 million. Both could prove equally toxic to hospitals.

The first, by New Jersey Gov. Chris Christie, would reduce the income cutoff for Medicaid recipients down to $5,317 for a family of three--some 80 percent lower than the current eligibility. Since I believe the last time a poor household earned so little in this nation was around 1975, that would pretty much eliminate adults from the rolls entirely.

Children in Medicaid would be untouched by this change, but given they would have to see their parents get sick and go without care, it's not a particularly warm and fuzzy takeaway. However, it would save New Jersey about $300 million a year. Since Christie does a pitch-perfect impersonation of the guy who sits behind a desk and patronizingly tells you why you're not getting a loan, it's a great fit.

Then there's Gov. Rick Scott's proposal in Florida. Everyone except the dual eligibles in nursing homes would be charged a $10 monthly premium, along with a $100 co-payment for emergency room visits. That would take as much as $369 million out of the pockets of Florida's poorest residents every year.

"This is not a budgetary decision; it's a philosophic stand," said state Rep. Matt Hudson, who chairs the Florida House of Representatives' Appropriations Health Care Subcommittee. "Everyone else in society is paying a portion of their own healthcare, including the military and retirees, so why shouldn't this segment of the population?"

I wonder if Hudson is aware that TRICARE, provider of coverage for military dependents and retirees, hasn't raised its premiums in 16 years, making its enrollees about the only Americans who have been completely shielded from the rising costs of healthcare delivery. The philosophic stand of relentless lobbying by veterans' groups may have something to do with it. If Florida's poor could pool just a fraction of $369 million together on their own, imagine what they could accomplish.

But Scott knows that won't happen, which is why he's going to sign the Florida bill into law. He's the dark genius of healthcare finance, having exited Columbia/HCA with about the same amount he wants clipped from Medicaid, while leaving the company on the hook for $2 billion in fraud settlements with the feds (a few Columbia/HCA middle managers were delegated the prison time). Scott has since used his fortune to be elected governor last year.

Once again, hospitals will be the losers in these two scenarios, their ERs flooded with uninsured patients with not even the first hope of paying their bills, the trend exacerbated further by denying the state's poorest residents access to preventive care. A study published last week in the Journal of the American Medical Association showed that a quarter of the nation's ERs have closed in the past decade. Obviously, this is not fast enough for either governor.

The one thing keeping these scenarios from occurring is both states must obtain waivers from the Centers of Medicare and Medicaid Services.

The one waiver that's been approved as of late is a mirror opposite to what Scott and Christie want: Allowing California to expand its Medicaid rolls by 400,000 or more until nationwide Medicaid expansion kicks in in three more years as part of healthcare reform.

Despite grumbling from many quarters that Medicaid underpays hospitals, I've yet to hear a CFO say they would trade an underpayment for nothing at all. As the Obama Administration shares that view, such waivers for New Jersey and Florida are unlikely.

But as I noted last week, the scenarios devised by Christie and Scott are separated by one mere good November day for the GOP from becoming a reality. Should it come to pass, a lot of bustling hospitals in the Garden State will be overrun with weeds, and many more in the Sunshine State will go dark. - Ron