Two studies have found that hospitals in non-expansion states saw a larger increase in revenue from commercial insurance last year than hospitals in expansion states saw. That's likely related to the fact that in non-expansion states, ACA premium subsidies to buy private exchange coverage were available to adults with incomes between 100% and 138% of the poverty level. In contrast, in expansion states that income group is automatically covered through Medicaid.
In Missouri, most nondisabled adults aren't eligible for Medicaid. Adults with children only qualify if they have incomes 18% below the federal poverty level, meaning the income threshold for a family of four last year was $4,365.
Missouri, by refusing to expand Medicaid, is losing $2.2 billion a year in federal Medicaid dollars. Faced with the lack of Medicaid expansion, many Missouri hospitals stay solvent by laying off employees, discontinuing unprofitable services and delaying new building projects and equipment purchases, said Herb Kuhn, president of the Missouri Hospital Association.
Even Missouri hospital leaders whose facilities are doing well financially are acutely conscious of how the state's failure to expand Medicaid is affecting their industry. They are quick to identify other hospitals that are struggling. Two rural facilities already have shut their doors. “If we don't figure out a way to move forward, we could lose five to 10 more hospitals in the state,” said Patrick Carron, CEO of Perry County Memorial Hospital.
Carron's 25-bed hospital is better off than most because of the particular economic situation in Perryville, a town of about 8,200 people. Located amid rolling hills and farmland about 80 miles south of St. Louis, Perryville has an employment rate below 5%, one of the lowest in the state. Food manufacturing, auto parts, farming and aircraft refurbishing provide industrial jobs in the area.
Carron's hospital's operating margin is typically in the 6%-8% range, while most of the state's other critical-access hospitals are barely breaking even.
Still, the past year has not been without challenges. Bad debt at his hospital increased 50%, which Carron attributed largely to the proliferation of high-deductible health plans and people not being able to afford their out-of-pocket costs. The hospital has put patients on payment plans with five or even 10 years to pay.
Nevertheless, Perry County Memorial is building. There are cranes working on medical office space, and the hospital recently bought a new CT imaging system. But it's cutting costs elsewhere, including through staffing. Carron said his facility needs to negotiate better rates with insurers to continue serving its patients.
For Missouri hospitals strong enough to issue bonds, operating margins improved to 2.9% for their fiscal 2014 from 0.9% the previous year.
Across the border in Illinois, the average operating margin for hospitals in the analysis rose slightly to 3.4% from 3.3%. But some of the state's most vulnerable hospitals say they're actually seeing a more substantial boost from the ACA's Medicaid expansion.
As coal-mining jobs dried up in Southern Illinois, the unemployment rate in Benton climbed above 9%. The state government is a major employer now, and many people work at one of the area's state parks or prisons.
The road from Benton to the nearby town of Christopher is dotted with pawn shops, gun shops and convenience stores advertising video poker and slots. Christopher's health clinic occupies a new building, one of the largest in the town.
Community health centers in the area have expanded “tremendously,” said Kim Mitroka, CEO of the Christopher Rural Health Planning Corp., which operates a dozen community health centers throughout the state and has added three clinic locations over the past three years that have brought in 18,000 additional patients. “We had a tough year last year. We did much better this year and I think a lot of it has to do with the (Medicaid) expansion.”
She estimated that her organization's Medicaid patients have increased 25%; almost all were previously uninsured. Medicaid patients now account for 40% of its total patients, and its operating surplus has increased 10% to $22 million.