Medicaid Expansion Puts Hospitals at Risk

The Foundation for Government Accountability (FGA) reports Medicaid Expansion Dramatically Increases Hospital Shortfalls emphasis mine.

Medicaid expansion ushered in through ObamaCare has led to program enrollment growth well beyond what was promised or projected. While proponents argue that expansion is a silver bullet to keep hospitals financially secure, this is simply not true.

Because Medicaid does not pay enough to cover the costs to hospitals to provide patient care, hospitals rely on private payers to make up for these losses.

The lower payment rate and more Medicaid enrollees—especially those forced out of private coverage—mean increased Medicaid shortfalls, contributing to lower profit margins. This increases pressure on hospitals' bottom lines, especially for rural hospitals where fewer patients make it more difficult to make up the shortfalls. The result is hospital closures in expansion states across the country. New data from the Department of Health and Human Services shows just how dire the situation is for hospitals in expansion states.

Not every state chose to expand Medicaid when given the chance beginning in 2014. This provides a real-life demonstration with nearly a decade of data, showing how covering so many able-bodied adults is affecting hospitals. This data can be invaluable for non-expansion states, as well as states that have expanded.

Hospitals in expansion states were in better financial shape before they expanded—but this has since flipped.

The reason for this flip in financial stability in expansion states is that hospitals count on private payers to make up for the reduced payments provided by Medicaid. In non-expansion states, private payers averaged payments of 128 percent of hospital costs, whereas Medicaid averaged only 76 percent of costs.