Medicaid not expanded will cost hospitals

States choosing not to expand Medicaid for the working poor under healthcare reform may create cuts to hospitals that provide this care, U.S. researchers say. John Graves, a Vanderbilt University policy expert in the Department of Preventive Medicine, said Disproportionate Share Hospital adjustment payments provide additional help to hospitals that serve a significantly disproportionate number of low-income patients. States receive an annual Disproportionate Share Hospital allotment to cover the costs of the hospitals that provide care to low-income patients not paid by other payers, such as Medicare, Medicaid, the Children's Health Insurance Program or other health insurance. As planned under the Affordable Care Act, Medicare, Disproportionate Share Hospital cuts begin with a 75 percent across-the-board reduction in 2014 as new insurance exchanges come online. The government devised a calculation to add some Disproportionate Share Hospital funds back, based on the proportion of citizens who are uninsured in each state. However, because of the Supreme Court determination that states couldn't be compelled to expand Medicaid, who becomes covered in each state varies widely. "Expanded insurance through the exchanges alone will trigger lower Disproportionate Share Hospital payments to hospitals," Graves said. "The problem comes in states where much of the uncompensated care provided will remain the same if Medicaid is not expanded, yet Disproportionate Share Hospital cuts will still occur. Hospitals will need to recoup these Disproportionate Share Hospital losses either by providing less uncompensated care, or by shifting the costs onto everyone else." The findings were published in the New England Journal of Medicine.