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States opting out of Medicaid expansion could increase uncompensated care by $53.3B

According to a new report from the National Association of Public Hospitals and Health Systems (NAPH), hospitals could possibly face a $53.3 billion increase in uncompensated care costs by 2019 if states forgo expanding their Medicaid programs as part of the Affordable Care Act (ACA).

The NAPH conducted the analysis using estimates from the Congressional Budget Office (CBO) from March 2010 when the ACA was passed. The CBO estimated that the number of uninsured Americans could rise by 6  to 10 million with states having the choice to opt out of the Medicaid expansion, said Beth Feldpush, vice president of policy and advocacy at NAPH. This would bring the total number of uninsured Americans to 29 million by 2019.

According to Feldpush, the increasing number of uninsured Americans will also coincide with a total of $14.1 billion in Medicaid disproportionate share hospital (DSH) reductions starting in 2014 – a key source of support for hospitals dealing with uncompensated care costs generated by Medicaid and uninsured patients.

"There will not be as many people covered under Medicaid as when the ACA was originally passed and those dollar amounts of DSH cuts are hardwired into the law," said Feldpush. "Hospitals will see the same amount of DSH cuts but they will not see the expected payments from patients who we originally thought would be covered under Medicaid."

Feldpush added that the hospitals seeing the greatest amount of DSH reductions are also the ones that will see many of the patients who were expected to be covered by Medicaid.

"I think that the imbalance we have now is really going to be financially challenging for a lot of hospitals," she said. "We'll see more cuts to DSH and less pick up from the Medicaid expansion."

The NAPH recommends that Congress restore the DSH funding that was cut in order to offset the costs of the increasing numbers of uninsured individuals and "devise a safety net funding policy that ensures access to care for all who need it," according to the report.

"We understand that Congress is going to have a lot of challenging discussions," she said. "We know that this is one small piece, but we wanted to come out with recommendation now to remind policy makers that we have this existing imbalance in the current law that needs to be addressed."

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