June 6, 2014—Despite health care reform, safety-net hospitals’ uncompensated care costs and Medicaid shortfalls will keep rising in California and in the states that do not expand Medicaid, a new study in Health Affairs finds.[ms-protect-content id=”2799″]
The study examines how California’s 20 acute-care public hospitals will be affected by reductions in Medicaid disproportionate share hospital payments under the Affordable Care Act. Congress is reducing Medicaid DSH payments under the assumption that expanded insurance coverage under ACA will generate increase revenue for safety-net hospitals.
The study found that if the Medicaid DSH payment cuts are implemented, California safety-net hospitals could face between $1.38 billion and $1.53 billion in uncompensated care costs and Medicaid shortfalls in 2019. In that year, it states, between 3.1 million and 4.0 million Californians “are still likely to be uninsured. Uncompensated care costs for this population will rise as a result of inflation in health care costs.”
Other factors that could impact a hospital’s total uncompensated care costs include patients not enrolling in the federal programs, and patients choosing to go to private hospitals once they are covered, the study said.
“The situation may be much worse” for hospitals in states that opt-out of Medicaid expansion, the study said. They will receive no extra funding from an expanded Medicaid patient population, yet they will still have to compensate for the same reduced DSH payments as all other safety-net hospitals, the researchers pointed out.
Congress has delayed the Medicaid DSH cuts twice, in 2013 and 2014. The cuts are slated to begin in 2017.[/ms-protect-content]