Moody’s Report: Hospitals Will Suffer Unless States Broaden Medicaid Coverage

Friday, 15 Mar 2013 01:54 PM

By Dan Weil

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U.S. hospitals will suffer if states fail to expand their Medicaid rolls as envisaged under the Affordable Care Act, according to a study by Moody's Investors Service.

The law calls for a cut in disproportionate-share (DSH) payments, which are granted to assist hospitals in paying for the care of uninsured patients, The Hill reports. The idea behind the cut is that most uninsured citizens will attain coverage through the individual mandate or the Medicaid expansion.

But the Supreme Court determined that the Medicaid expansion is optional, so state governments are likely to receive a lot of lobbying from the hospitals to approve it.

The 14 states that have declined the federal government’s offer to finance Medicaid expansion will face "budgetary strain" one way or the other, Nicole Johnson, a senior vice president at Moody's, says in a statement.

"States that opt out of Medicaid expansion will have to choose whether to compensate for the shortfalls with their own funds or leave hospitals to absorb the costs, which will increase rating pressure on the hospitals," she says.

Meanwhile, Diana Furchtgott-Roth, a senior fellow with the Manhattan Institute, argues that Obamacare will cost jobs, particularly for low-skilled labor, because the healthcare law imposes cost increases on employers.

“Whenever possible, firms will substitute high-skill for low-skill labor, part-time for full-time workers, machinery for people, and refrain from hiring a 50th worker, which can make them liable for penalties,” she writes on MarketWatch.



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