During negotiations over the Affordable Care Act, America’s hospitals looked at the landscape, took a deep breath, and decided to take one for the team. They agreed to accept cuts of $155 billion over ten years to help cover the costs of health reform, largely through decreased Medicare payments, figuring improvements in insurance coverage would make up the difference. But in 22 states, officials haven’t accepted federal funds to help expand health coverage to the low-income uninsured. This means that hospitals in non-expansion states are still treating high numbers of uninsured patients – and those costs aren’t being covered.
This isn’t a “self-inflicted wound” for hospitals, as some have contended. The law as originally approved by Congress required states to expand coverage or risk losing all Medicaid funds — a deal that was changed retroactively when the US Supreme Court made expansion optional. State leaders still have the option to expand health coverage at little cost to the state. But in Oklahoma, they haven’t done their part: uncompensated care expenditures haven’t dropped as expected to cover lower Medicare reimbursements, and hospitals are hemorrhaging as a result.
The issue is particularly acute in rural areas. In Oklahoma in 2012, uncompensated care cost hospitals $547 million – on median, 6.1 percent of their budgets. In urban and suburban areas, whose residents are more likely to be insured, hospitals can typically ‘shift’ some of the costs of that care onto insured patients. But in rural hospitals, the issue is more acute. In 2012, 1 in 4 rural hospitals found that uncompensated care comprised more than 10 percent of their budget, according to the Oklahoma Hospital Association. In one hospital, uncompensated care was 17 percent of its budget. These costs are too high to be passed on to insured patients, and that’s leaving rural hospitals in the red – and could force closures.
Shuttering rural hospitals presents a very real danger to the lives of rural Oklahomans. The likelihood of patient survival is much higher if they receive treatment within an hour of traumatic injury or accident. Without rural hospitals, patients need to go much farther for care. Imagine traveling two hours or more following a heart attack or a broken hip. If rural hospitals close, that will be the new reality for many Oklahomans.
Between Medicare cuts from the Affordable Care Act and sequestration, Oklahoma hospitals expect to lose close to $3 billion between 2013 and 2022. But the Oklahoma Hospital Association projects that accepting federal funds to expand health coverage would result in $4 billion to the state’s hospitals over the same time period – more than covering the money lost.
We’re already seeing the positive effect of expanding health coverage in other states. Data from the US’s four largest hospital companies from the second quarter of 2013 through the second quarter of 2014 found that in expansion states, uninsured admissions dropped by between 48 and 72 percent. By contrast, in non-expansion states, the largest decrease in uninsured admission was 14 percent, or less than one-third of the drop in expansion states. One hospital system saw a decrease of only 2 percent, and another saw no change at all.
Clearly, other states that have expanded coverage are already reaping the benefits, and its track record shows that expanding coverage would be a good deal for Oklahoma. Both the Oklahoma Hospital Association and Leavitt Partners, a group hired by the Governor’s office to investigate possibilities for extending health coverage to low-income Oklahomans, recommend expanding the state’s home-grown Insure Oklahoma program. Doing so would keep the state’s critical rural hospitals above water, provide access to affordable health care for thousands of Oklahomans, and boost the economy. But in the meantime, Oklahoma is missing out, and our hospitals are hurting because of it. Fortunately, we know how to fix the problem. It’s just a matter of finding the will to do it.