When Colorado expanded Medicaid coverage under former President Barack Obama’s health care law, the largest provider in the Denver region hired more than 250 employees and built a $27 million primary care clinic and two new school-based clinics.
Emergency rooms visits stayed flat as Denver Health Medical Center directed many of the nearly 80,000 newly insured patients into one of its 10 community health centers, where newly hired social workers and mental health therapists provided services for some of the county’s poorest residents. Demand for services at the new primary care clinic was almost immediate.
The hospital system, like others around the country, now is facing enormous uncertainty under the health care overhaul proposed by congressional Republicans.
The GOP plan would scale back the Medicaid expansion and take away direct federal subsidies to help consumers pay their health insurance premiums, replacing them with age-adjusted tax credits.
Denver Health could see revenue losses between $50 million and $85 million by 2020, which is between 5 and 9 percent of their annual revenue, according to the hospital’s chief financial officer. Adding to the financial anxiety is that Denver Health and many other hospital systems and medical providers across the country still would be required to care for many of the same patients, even if they lost their health coverage. That would leave hospitals, state and local governments, or privately insured patients to foot the bill.
“If it’s full removal of Medicaid expansion, we would have to make cuts on our system, and I really think that those cuts would roll back our progress and could paradoxically increase the cost of care by driving care back to where it shouldn’t be — in the emergency rooms,” said Dr. Bill Burman, interim chief executive for Denver Health.
Similar sentiments are being shared by hospital CEOs across the country as President Donald Trump and congressional Republicans make good on their promise to undo the Affordable Care Act.
The Republican plan would limit the amount of federal money available to states that opted to expand Medicaid, the state-federal program that provides health coverage to the poor and lower-income people. It also would overhaul the framework of Medicaid generally so that in the future states would receive a limited amount per person based on enrollment and costs. Health care advocates have said such a change would mean less Medicaid money for the states.
The Republican proposal would boost one revenue stream for hospitals that had been cut under Obama’s plan — a pool of money helping hospitals that care for a disproportionately high share of uninsured patients. But hospital CEOs say that money will not come close to making up for the revenue lost if large numbers of people lose their health coverage.
The American Hospital Association, which represents nearly 5,000 institutions nationwide and the Catholic Health Association of the United States, the nation’s largest not-for-profit health provider, wrote Congress warning that the bill would lead to significant cuts in a program that provides services to the most vulnerable.
“We are likely looking at situations where hospitals would close down service lines, shorten clinic hours and lay off staff,” said Beth Feldpush, a senior vice president at America’s Essential Hospitals.
The Affordable Care Act sought to get more people covered and give them access to primary care doctors, theoretically increasing the number of paying customers for hospital systems while diverting those people away from emergency rooms where they are more expensive to treat. About 22 million people have gained coverage through Medicaid and by buying private health insurance in the government-sponsored marketplaces that offer plans with subsidized premiums.
The national uninsured rate is below 9 percent, a historic low.
Moody’s Investors Service said it expects that the legislation’s provision to cap federal Medicaid payments to the states, starting in 2020, will cause states to reduce payments to hospitals. The legislation also would saddle hospitals with more unpaid bills and uninsured patients, particularly older ones who could now face much-higher premiums, according to Moody’s.
“We believe that the effect of older enrollees losing coverage will outweigh the positive effect of younger people gaining coverage, given that older people have greater health care needs and as they lose coverage, hospitals would incur greater uncompensated care and bad-debt costs,” the report states.
S&P Global Ratings wrote that the bill would add to existing stresses on hospitals, including rising costs for salaries and prescription drugs.
NYC Health + Hospitals, the largest public health system in the country that serves mostly low-income people, made a rare decision to create its own insurance plans to help maximize revenue in the changing health climate. One of its plans, granted under the Affordable Care Act, offered premiums of $20 or less per month to 70,000 low-income enrollees. An additional 96,000 people gained coverage in another insurance plan under Medicaid expansion.
One plan would be eliminated entirely under the bill and tens of thousands would lose coverage on the other under the Republican bill.
Stanley Brezenoff, the health system’s interim president, says it’s “particularly appalling” for the expanded Medicaid patients who spent years going without insurance. Many of them have substantial medical needs and finally were able to get into a routine of receiving regular medical care.
“It is a brutal assault on the health care system, especially as it applies to the people in greatest need with historically the least access to care,” he said.
Rural hospitals are particularly at risk.
One of the most likely ways hospitals will make up for revenue losses is by increasing the amount they charge privately insured patients. But rural hospitals have less bargaining power to negotiate rates with insurers because they have such a small number of insured patients to begin with, said Bruce Rueben, president of the Florida Hospital Association.
At Jackson Health, a 100-bed hospital in rural Marianna in the Florida Panhandle, 90 percent of patients are receiving charity care because they are uninsured or on Medicaid. They are the working poor who make too little to qualify for subsidies under Affordable Care Act plans and too much to qualify for Medicaid under Florida’s stringent standards, where you must be a pregnant woman, child or disabled for the most part to qualify.
Nearly 60 percent of the hospital’s patients work in agriculture, growing peanuts and fresh produce. Emergency room visits there continue to creep up every year by 2 to 3 percent, said chief financial officer Kevin Rovito.
“If they keep cutting the reimbursements for the hospital one way or another and we do disappear, then where are these patients going to go?” he said.