Hospitals Brace for Obamacare Repeal

Rescinding Medicaid expansion could cost billions, trade groups warn

Hospitals across the United States made a high-stakes trade when they signed on to the Patient Protection and Affordable Care Act (PPACA). They agreed to massive cuts in federal aid that defrayed the cost of caring for the uninsured. In exchange, they would gain tens of millions of newly insured customers. Now, with repeal of the PPACA on the horizon, that deal is in jeopardy, and many hospital executives anxiously await whatever comes next, according to an article posted on the Kaiser Health News (KHN) website.

Two hospital trade groups—the American Hospital Association and the Federation of American Hospitals—have warned of “an unprecedented public health crisis” if the PPACA is hastily scrapped. They said that if Congress repeals the act entirely and 20 million people are kicked off their insurance, hospitals will lose $166 billion in Medicaid payments alone during the next decade. And hospitals face much steeper losses if certain Medicare cuts that were part of the PPACA aren’t restored, the KHN article says.

The PPACA also shifted the business model for U.S. hospitals. It offered them financial incentives to move away from expensive emergency room (ER) visits to primary care and managing chronic conditions. Before the PPACA was enacted, hospitals had little incentive to reduce ER visits, especially by Medicare patients, who generate a lot of revenue.

The uncertainty over the PPACA is also roiling county governments, which often fund medical care for the poor, according to KHN. For example, the burden on local taxpayers to fund the Cook County health system in Illinois has dropped by $300 million since the PPACA went into effect, and repealing it could force local governments to raise taxes.

“It's a $300 million hole in our budget,” said Toni Preckwinkle, president of the Cook County Board of Commissioners. “There aren’t a lot of options other than raising more revenue. It’s a nightmare for us.”

More than a dozen top Republican lawmakers declined to be interviewed for the KHN article. But a spokeswoman for Senator Lamar Alexander (R-Tennessee), who chairs the Senate Committee on Health, Education, Labor, and Pensions, said in a statement that Alexander “is listening to hospitals, doctors, patients, state insurance commissioners, [and] governors” as they draft the PPACA replacement plan.

The most recent draft of the Republicans’ proposal would eliminate the Medicaid expansion, which covers 14 million people, by 2020. To offset the increase in uninsured patients, the plan would reverse some of the payment cuts to hospital.

Source: Kaiser Health News; February 28, 2017.