Jackson Jambalaya

Moody's Investor Service reported that Obamacare has both helped and hurt hospitals in states that expanded their Medicaid programs.  Bad debt went down but medical costs went up as Medicaid reimbursement rates don't cover all expenses associated with a Medicaid client.  The Wall Street Journal reported this morning:


The health law’s expansion of Medicaid in many states hasn’t benefited nonprofit hospitals in those states as expected, according to a new report by Moody’s Investors Service.

Hospitals in the mostly blue states that expanded Medicaid were largely expected to benefit from fewer unpaid bills and more paying customers, but that hasn’t generally translated into better operating margins or cash flow, Moody’s found.

Performance improved across the board—including in the mostly Republican-led states that opted out of the law’s Medicaid expansion—as the economy gained steam last year and unemployment declined.

In expansion states, hospitals’ unpaid bills fell 13% on average last year compared with 2013, the report found. But, their 2014 operating margins didn’t increase any more than hospitals in the 22 states that have sat out the expansion, the report shows.

“Clearly, reducing bad debt is positive, but it is not this silver bullet,” said Daniel Steingart, a Moody’s analyst and author of the report. He said the findings call into question “a narrative out there that Medicaid expansion has lowered bad debt and that is driving [financial] improvements at hospitals.”

In Illinois, where Medicaid rolls grew by about 500,000 after the law’s key provisions took effect, one hospital found the changes didn’t fuel any big financial improvement.

“We did see a significant decrease in” unpaid bills, said Michael Kasser, chief financial officer of Southern Illinois Healthcare, which runs three hospitals southeast of St. Louis. “The bad news is, we saw such a huge increase in Medicaid,” he said, noting that the program pays only about half the hospital’s costs, on average.

He said the hospitals saved about $9 million in unpaid bills, but incurred around $28 million in costs for Medicaid patients, only about half of which was reimbursed by the state-run program. The result: Losses of around $5 million, despite expansion. Mr. Kasser says he believes many of those Medicaid patients had put off care—perhaps for years—when they lacked coverage. “We saw big cases, very sick people,” he said.

Across the Mississippi river, in Missouri, state officials opted out of expanding the program. Hospitals there say that decision has worsened their challenges at a time when reimbursement is shrinking.

“We are not seeing the benefit of significantly decreased uninsured,” said Chris Howard, president of hospital operations at St. Louis-based SSM Health, a nonprofit chain. He said SSM’s operating margin increased in 2014, but “only as a result of extensive cost reductions” that included layoffs. Mr. Howard said he believed Medicaid expansion would increase Missouri hospitals’ margins, but that some hospitals would reinvest any gains from the expansion in restoring prior staffing levels or other projects that may have been delayed.

Medicaid expansion could yet bring some hospitals bigger financial boosts, in states that have so far sat it out. Moody’s Mr. Steingart notes that Medicaid programs in those states have tended to have narrower eligibility rules, leaving hospitals there with typically high amounts of unpaid bills. That means more room for a financial upside from an influx of paying customers if those states change their mind.

States like Mississippi, Missouri and Texas have historically covered only the lowest-income people in their programs—such adults making less than 22% of the federal poverty line in Missouri, according to the Kaiser Family Foundation..... Rest of article.