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How Hospitals are Handling Medicaid Expansion Uncertainty

Many concerned about the rising costs of healthcare for the uninsured.

In June, the Supreme Court upheld the constitutionality of most of the Patient Protection and Affordable Care Act (ACA), with the exception of a provision calling for expanding Medicaid to cover everyone at or below 133 percent of the federal poverty line. The high court ruled that states must have the choice to opt out of expansion (which will be covered by the federal government until the end of 2014) and not lose federal funding for existing Medicaid programs or other programs as a consequence.

Since the ruling, several governors have openly stated that they do not plan to expand Medicaid in their states. Other state leaders are researching the issue and discussing it with key stakeholders and legislators before making a decision.

Adding to the uncertainty for states is the upcoming national election. If voted into office, Republican Presidential Candidate Mitt Romney has vowed to issue an executive order for "Obamacare" waivers for every state and to work with Congress to repeal the ACA.

Yet, Cleveland Clinic President and CEO Toby Cosgrove warned that in states that don't expand Medicaid in 2014, medical providers will suffer from lower reimbursements and higher insurance premiums.1 Craig Becker, president of the Tennessee Hospital Association, agreed, noting that providers already "cost shift" to handle the cost of uncompensated care - with close to 30 percent being added on to almost every private insurance bill.

With so much at stake, healthcare professionals must stay informed about the direction their states are heading toward. Here is a look at how several governors are weighing in on the issue of Medicaid expansion:

Texas Governor Plans to Opt Out
Douglas D. Hawthorne, FACHE, chief executive officer of Texas Health Resources, is encouraged that the Supreme Court's decision will help millions of uncovered Americans gain access to health insurance, but he is disappointed that Texas Gov. Rick Perry (R) plans to opt out of Medicaid expansion. Texas ranks in the last quartile of states in the U.S. providing services to the Medicaid patient, Hawthorne noted.

"We saw this as something that could be extremely detrimental to the state in terms of providing care to those who need it," Hawthorne said. "For us on the provider side of the equation, we will see these people regardless, and [this] will only exacerbate the issue of more people presenting without having a resource to pay. What we have found is when people don't have a resource to pay, they usually wait longer for care, and therefore the care is more extreme and often more expensive."

Hawthorne is hoping that through continued conversation with the governor and legislature in 2013, they will see a different point of view and expand the Medicaid program in Texas.

"They know that the private hospitals like Texas Health Resources provide 84 percent of the inpatient care for Medicaid patients and 50 percent of the care for the indigent, so it's not as though they don't understand the impact," Hawthorne said.

Tennessee Governor Undecided
As of early August, Tennessee Gov. Bill Haslam (R) had not yet decided whether to opt out of Medicaid expansion, leaving a considerable question mark for Tennessee hospitals and healthcare providers. Becker's association is working with the state to figure out how to fund the ACA and possible Medicaid expansion. Uncompensated care is the state's Achilles heel, Becker said.

"We've already given up over $155 billion in cuts, of which our share is about roughly $4.5 billion, so it really is going to have a serious impact on us," he said. "And then without the [Medicaid expansion] coverage, I'm not sure how all of our hospitals will survive. In fact, I know they won't."

He believes his state leaders would like to expand Medicaid, "but until they figure out how they're going to pay for it, I think that's certainly going to be part of their concern." He expects an official ruling from the state after the elections.

Florida Governor Announced State Will Not Expand Medicaid
Florida Hospital Association President Bruce Rueben is waiting for the outcome of the election in November to have more certainty about the ACA and Medicaid expansion, although he is relieved the law was ruled constitutional and that more Floridians are signing up to get health insurance. "We know that it's best for people to have health insurance," he said. "All of the research demonstrates that people who have health insurance tend to be healthier and have better outcomes when they do get sick."

In early July, Florida Gov. Rick Scott announced his state will not expand Medicaid - a point of concern for Rueben.

How Hospitals are Handling Medicaid Expansion Uncertainty

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