Late News: Hospitals may face dual threat if states don't expand Medicaid

Hospitals in states that elect not to expand their Medicaid programs could find their bottom lines squeezed in the coming years as they're hit with higher charity-care costs and fewer insured patients than envisioned under the federal healthcare reform law. A report from Moody's Investors Service estimated that the Patient Protection and Affordable Care Act is expected to eliminate more than $17 billion in annual aid by 2019 when the government reduces its disproportionate-share hospital payments, which compensate facilities that treat large numbers of low-income patients. Lisa Goldstein, associate managing director at Moody's, said in an interview that safety net hospitals will either have to absorb the costs of charity care or look to the state to “backfill” the lost funding. Medicaid and Medicare DSH payments will be reduced gradually starting in October, with the cuts building through 2019, according to the Moody's report. Hospitals in states where Medicaid expansion is uncertain have been taking the fight to local policymakers and the media. In Tennessee, the de facto hub of the for-profit hospital industry, local business leaders and chambers of commerce have formed the Coalition for a Healthy Tennessee Economy, with the goal of “educating Tennessee residents on the economic benefits of Medicaid expansion.” Craig Becker, president of the Tennessee Hospital Association, said hospitals in the state stand to lose $5.6 billion at a time when 58 facilities, most of them rural, are already losing money. “Why should we send those tax dollars to California, New York or Vermont, or even New Jersey?” Becker said.