The 1,500 hospitals that provide the last hope of health care to the uninsured
might be struggling the most under the cost controls built into the Affordable Care Act. The likelihood of that has only been increased as more Republican governors refuse to take the Medicaid expansion funding to increase coverage to more of the uninsured.
“This is a time of uncertainty for them,” said Stu Guterman, vice president of the Commonwealth Fund. “On the one hand, they should be thrilled because a lot of the patients they treat will have payment attached to them. On the other, they’re losing some of the funding they rely on.”
A report released Tuesday by the private consulting firm Alvarez & Marsal warned that the health-care law “may actually worsen the status of many safety net hospitals.”
There are three spending cuts in Obamacare that will hit these hospitals, most already having seen cuts because of state cutbacks. First, the rate of regularly payments from the federal government will be slowed down, an attempt to hold down hospital spending. Additionally, the "disproportionate share payments," federal funding to the hospitals that cover a high level of uninsured patients. These payments are scheduled to be cut $30 billion over the next decade. President Obama's
budget would postpone those cuts for this year, a double-edged sword for these hospitals. On the one hand, they don't have to worry about that funding. On the other, having this funding retained for this year takes away that much more incentive for states to refuse the Medicaid expansion—the states won't be inclined to replace the funding with Medicaid money.
The final potential cut comes from the quality-control measures for Medicare, with reimbursements based in part on quality of care and patient satisfaction. Both measures are hard for hospitals that treat large numbers of uninsured, with all the attendant care challenges, to achieve.
The better news for these hospitals is that there will be a smaller population of uninsured people and therefore fewer uninsured patients. The best news would be if the remaining uninsured population would be on Medicaid, even with its lower payment rates.