Obamacare

Hospitals Are the Latest Victims Of ObamaCare's False Promises

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06/15/2015 06:46 PM ET

Broken Promises: President Obama recently claimed that ObamaCare is working even better than anticipated. That would be a tough sell to all those hospitals that thought the law would help them make ends meet.

In the Supreme Court's ObamaCare ruling in 2012, which upheld the individual mandate, the justices also ruled that ObamaCare couldn't force states to expand Medicaid by threatening all their Medicaid funds if they refused.

The justices ruled that states should be free to make this decision without the feds holding a gun to their fiscal heads.

As a result, 22 states decided not to increase Medicaid eligibility, per ObamaCare, to those with incomes that are 38% higher than the poverty rate.

ObamaCare supporters said these holdout states were crazy to turn down the offer.

After all, the law promises states a sweet deal — the federal government will pay all the expansion costs for the first three years.

While the federal share will eventually go down to 90%, that's still far more generous that the 50-50 split between states and the federal government for the existing Medicaid program.

Plus, the argument went, hospitals in expansion states would greatly benefit, because their uncompensated care costs would go down as more uninsured people got coverage through Medicaid.

And so, we got stories telling us how "states that refuse to accept ObamaCare's Medicaid expansion aren't just leaving behind poor residents, they're also hurting hospitals' bottom lines."

And we were told to "watch for more GOP-controlled statehouses to try similar maneuvers. Hospital lobbyists generally have the ear of governors, and they want Medicaid expanded."

The Obama administration helpfully provided studies claiming that the expansion was indeed working, with estimates that hospital uncompensated care costs dropped $7.4 billion last year, and that "Medicaid expansion states account for $5 billion of that."

Well, it turns out that hospitals in the expansion states aren't any better off than in states that didn't take the expansion bait.

A Moody's report issued earlier this month found that hospitals in "Medicaid expansion states did not outperform hospitals in non-expansion states" when it comes to earnings.

Yes, it found, hospitals in expansion states saw uncompensated care costs drop by 13%, but their operating revenues were no better than hospitals in non-expansion states.

Why? Because Medicaid vastly underpays providers, and expansion states are seeing big increases in the number of Medicaid patients.

One hospital in Illinois says it cut its unpaid bills by $9 million last year, but had $28 million in Medicaid costs, for which it got paid $14 million. So on balance, ObamaCare has left the hospital $5 million deeper in the hole.

In Kentucky, which fully embraced ObamaCare and where three quarters of the newly insured are on Medicaid, the state's hospital association says the law has cost hospitals there $1 billion, resulting "in hospital staff layoffs" and threatening the "availability of hospital care, especially in rural areas."

Meanwhile, several states that expanded Medicaid have seen enrollment rates much higher than expected. Just seven states saw 1.4 million more sign up for the government-run health program than they'd planned.

In Kentucky, Medicaid enrollment was twice what the state had predicted, and in Illinois, more than 500,000 had signed up. The state estimated that 199,000 would.

Now they're starting to wonder how they're going to pay these costs down the road.

But, no matter. When it comes to big government programs, it's the thought that counts, right?