Medicaid Expansion Is a Windfall for Hospitals

Medicaid Expansion Is a Windfall for Hospitals

Medicaid

(Business Week) – Hospitals in states that expanded Medicaid have more paying customers, bolstering the bottom lines of for-profit hospital chains, a new analysis published on Wednesday shows.

“For-profit health systems, operating more than 500 hospitals in the U.S., report far better financial returns through the first half of the year than expected,” the report (PDF) from PricewaterhouseCoopers Health Research Institute found. One chain, LifePoint Hospitals (LPNT), reported a 30 percent drop in “self-pay” patients, whose care hospitals often write off as a loss.

The Affordable Care Act was intended to eliminate situations where poor, uninsured patients land in emergency rooms and receive treatment for which hospitals don’t get paid. The law made those at the bottom of the income ladder—earning less than $15,500 a year for an individual or $32,200 for a family of four—eligible for Medicaid, the joint state-federal insurance program for the poor.

The hospital industry agreed to $155 billion in Medicare payment cuts in exchange for reducing the amount of care they provide for free. (That care, by the way, is paid for by higher charges to insured patients—the kind of cross-subsidy ubiquitous in American health care.) But the Supreme Court upended the deal in 2012 by making Medicaid expansion optional. Since then, 23 states, mostly in Republican control, have declined to broaden eligibility for the program. Pennsylvania is the latest to expand, reaching a deal with the White House last week.

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