Rejecting Free Money Is Really Expensive: Live from The Roasterie CCCXVII: August 27, 2014
$423 billion over the next decade if the red states continue to reject Medicaid expansion. This won't be enough of a cash shortfall to send the red states into a near-permanent recession or stagnation--it's only 0.5% or so of gross economic product over the next decade. But it will hurt, and hurt a lot: the right multiplier to apply here is the Moretti long-run geographic multiplier of 6, which means that economic activity in red states in a decade will be 3% less and in blue states 1.5% more than in the baseline.
Richard Mayhew: Rejecting free money is expensive: "Forbes Magazine is using little words to explain to its readers...
...that hospitals in states that are rejecting Medicaid Expansion are hurting:
financial issues are emerging for medical care providers in the two dozen states that didn’t go along with the expansion under the Affordable Care Act.
Reports out in the last week indicate the gap between those with health care coverage is widening between states that agreed to go along with the health law’s Medicaid expansion and those generally led by Republican legislatures and GOP governors that are balking at the expansion….
“We expect providers in states that have chosen not to participate in expanded Medicaid eligibility to face increasing financial challenges in 2014 and beyond,” Fitch said in its July 16 report. “Nonprofit hospitals and healthcare systems in states that have expanded their Medicaid coverage under the Patient Protection and Affordable Care Act have begun to realize the benefit from increased insurance coverage.”
As I explained in my post on rural hospitals and Disproportionate Share Hospital payment reductions, this is a logical consequence of Chief Justice Roberts and his associated sociopaths making Medicaid expansion optional.
The hospital most likely relied on Disprorpotionate Share Hospital payments. These payments are Medicaid reimbursement bonuses to hospitals that serve underinsured and overly poor areas. The goal of the DSH payments was to make up for some of the fixed costs that normally would be covered by private insurance’s higher reimbursement rates. PPACA reduced the pool of money committed to DSH payments. The policy logic behind the reduction was that the Medicaid expansion and Exchange subsidies should significantly reduce the number of people who are uninsured and receive care that is not directly paid for, therefore the need for DSH payments would decrease.
That logic is sound, and it works as long as there was the assumption that the Medicaid program and expansion was a single program that every state in the nation would take as the deal was too damn good to pass up. It is working in the Expansion states.
Thanks to the assholes on the Supreme Court and the sadists and sociopaths in the Republican Party, half the states have not taken up free federal money to cover their poor uninsured population via Medicaid Expansion… the compensating factors for the DSH payment cuts aren’t compensating as intended in Republican governed states.
In a rational world, blame would be placed squarely on the Republican governors and Teabagging legislatures for refusing free money. In a slightly less rational world, blame would be split between the Supreme Court and the Teabaggers who say Nee. In our world, at least 27% of the country will blame Obamacare for closing the rural hospitals in non-Expansion states.
