Among the flawed arguments made by opponents of Medicaid expansion in Mississippi is this one: Because Medicaid generally does not compensate hospitals enough for what it takes to provide the care, they could actually end up doing worse financially if the state expands the program to cover the working poor.
That was what Douglas Carswell, the president and CEO of the Mississippi Center for Public Policy, wrote over the weekend in explaining his conservative think tank’s opposition to expansion.
“Every time a rural hospital treats someone on Medicaid, the hospital normally loses money. How would expanding such a loss-making system improve the financial position of rural hospitals. It wouldn’t,” wrote Carswell, whose organization claims a number of adherents among Mississippi’s GOP lawmakers and state officials.
“The problem is not too little Medicaid, but too much of it,” he continued. “Drawing more people and health care providers into this loss-making system solves nothing — and might make matters worse.”
Before exposing the overall fallacy of Carswell’s argument, it must be acknowledged that it contains a kernel of truth: Medicaid reimbursements, by most accounts, are calculated at a rate that is below cost. The American Hospital Association estimates the average shortfall at about 12% — that is, for every dollar a hospital spends to treat a Medicaid patient, it only gets 88 cents back.
That is a huge problem, especially since Medicare, the other major government health insurance program, reimburses at an even lower rate. Hospitals with a disproportionately large share of Medicaid and Medicare patients, such as Greenwood Leflore Hospital, don’t have enough private-pay patients to make up the difference. Lose enough money long enough on Medicare and Medicaid, and a hospital eventually goes under.
But to use this as a reason to reject Medicaid expansion — and the roughly billion dollars a year that would be coming into Mississippi from the federal government — is nonsensical. It’s like saying it’s better to get zero of your expenses reimbursed than 88% of them.
That’s because hospitals, unlike doctor’s offices, cannot use ability to pay for care as a criteria of whether the care is provided. When people show up at the emergency room, the hospital is legally required to treat them, regardless of the patients’ financial circumstances. If the patients don’t have insurance, the hospital ends up in most cases having to write off the charges as uncollectible. Medicaid expansion would reduce this amount of bad debt or charity care, even after taking into account Medicaid’s below-cost reimbursements.
Russ Latino, another conservative Mississippi commentator who is no fan of Medicaid expansion, recently provided a case study that unwittingly refutes Carswell. It involved the experience of Ascension Health Hospitals, the nation’s largest not-for-profit hospital system, in the nine months prior to Medicaid expansion and the nine months after the program kicked in with the early adopters.
In states that had expanded Medicaid, Ascension saw a decrease in charity care of $35 million but an increase in Medicaid underpayments of $23 million, for a net gain of $12 million.
Even more telling was what happened in non-expansion states — numbers that Latino curiously failed to note. Ascension’s hospitals there saw a smaller decrease in charity care ($23 million) and a greater increase in Medicaid underpayments ($99 million), for a net loss of $76 million.
The bottom line is this: To say Medicaid expansion alone won’t save struggling hospitals is true. But to pretend it won’t help them is being intellectually dishonest.
