Hospital Profits Soaring in States With Medicaid Expansion

Wednesday, 03 Sep 2014 01:15 PM

By Drew MacKenzie

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Hospitals are reaping huge profits in states that signed up for the government’s expansion of Medicaid under Obamacare, according to the National Journal, citing a new report from PricewaterhouseCoopers.

In the 27 states that agreed to participate in the program, profit margins have soared as more patients with insurance coverage go to hospitals for care.

Hospital chains, in particularly, are cashing in, adding millions of dollars to their bottom lines. And with more enrollees expected to sign up with Obamacare later this year, the profits could go even higher, the Journal said.

On the other hand, states that did no enlist in the Medicaid expansion program are not getting a financial boost.

Hospitals across the country had agreed to take payment cuts, believing that a surge of new patients with insurance under Obamacare would more than balance the books. But in states without expanded Medicaid that hasn’t happened, according to the report.

Under the Affordable Care Act, hospitals expected a greater volume of patients because they have to care for anyone who walks in whether they have insurance or not.

But with more people insured in the 27 states with expanded Medicaid, hospitals are getting reimbursed for a far greater amount of treatments than before the healthcare law was passed.

And Medicaid has turned out to be a bigger boon than even hospital chains had expected, PricewaterhouseCoopers says in its report.

Community Health Systems, which operates hospitals in 12 states that have accepted the Medicaid expansion, said Obamacare resulted in $40 million more in earnings for the first six months of this year. And the chain expects a similar increase in the second half.

LifePoint, which operates in 20 states, credits Obamacare with about $13 million in additional earnings.

The country's three largest hospital chains have seen an almost 50 percent drop in the number of uninsured patients, as well as increases of up to 32 percent in their Medicaid admissions, according to the report.

One chain, Tenet Healthcare, said its unpaid care dropped by $78 million in the second quarter of 2014 alone, according to the Journal.

But in the states that turned down Medicaid expansion, the number of patients has remained steady while the number of uninsured patients has barely changed.

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