Monday, November 11, 2013

Medicaid Expansion Needs to Happen Sooner Rather Than Later

The New York Times had a big piece this weekend on the pinch felt by community hospitals in states that are not expanding Medicaid to cover everyone -- mostly the working poor -- who have incomes under 133% of the Federal Poverty Line.

To review, in the pre-ACA world, the federal government funneled extra money to hospitals that served an unusually large number of Medicaid & uninsured patients. This helps these hospitals make up for the fact that Medicaid and uninsured patients tend to pay a lot less. The ACA includes a significant boost in Medicaid reimbursements, and should lead to a decline in the number of uninsured patients between the individual mandate and Medicaid expansion. In theory these changes should help safety-net hospitals become less reliant on DSH payments. In practice, however,  twenty-four states run by troglodytes have rejected Medicaid expansion, and will thus voluntarily decimate their safety-net hospitals.

Illinois should thank Republican governor of Wisconsin and state legislature of Missouri for any new hospitals
that are built in the next five years.
The impact of this decision on states' economies and political economies is likely to be significant. Some estimates suggest that Medicaid expansion may increase a city's economic output by as much as 2-3%. Medical professionals and for-profit hospital managers will have significant incentives to gravitate towards states that have accepted the Medicaid expansion. If Jay Nixon (D-MO) manages to hammer out a Medicaid expansion compromise with his Republican legislature while Sam Brownback (R-KS) sits on his hands, the Kansas side of Kansas City will suffer relative to the Missouri side. State-level Medical Associations and especially Hospital Associations will have tremendous incentive to become 100% Democratic donors at least at the federal level, and to back any Democratic candidates for governor or state legislature that appear viable.

The White House blog notes that the number of states accepting the original expansion of Medicaid under LBJ exactly matches the expansion under Obama, and that over the next four years, all but two states decided the expansion was worthwhile. Thus the current state of Medicaid expansion is not without precedent, even if it's completely immoral.

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