Health care leaders say states playing politics with Medicaid expansion

When states choose not to expand Medicaid, it is strictly a political move, according to a panel of health care leaders at a Nashville Health Care Council event Wednesday.

“I just can’t get over it,” said Ralph Giacobbe, director of Credit Suisse’s health care research team. “We all know that it’s simply politics at play here.”

To which Wayne Smith, the panel’s moderator and CEO of Franklin-based hospital company Community Health Systems Inc. responded, “Good job. Would you like to speak to our state legislature?”

Tennessee is one of more than two dozen states that have not yet approved an expansion of the Medicaid program. Governor Bill Haslam says he is working with federal officials to work out some sort of compromise deal, but few details are available.

Some form of state-funded insurance for the poor will ultimately take off even Tennessee, predicted Whit Mayo, a senior analyst at Robert W. Baird. So far, Tennessee has neither expanded Medicaid nor pursued a comparable alternative. “At the end of the day, the economic benefit that you’re leaving on the table is too large.”

The political tipping point, Mayo continued, will happen in Tennessee when facilities start to feel the financial hit from reduced DSH payments. A DSH payment is money that the government pays hospitals to help reimburse for charity care.

With the implementation of the Affordable Care Act, the government rolled out a plan to cut back on DSH payments, assuming that hospitals would provide less charity care since more patients would be insured via Medicaid.

Hospitals in states that don’t expand Medicaid will get less money in DSH payments and won’t have the benefit of more insured patients. “I think the political uproar is going to be too much to bear,” Mayo said.

“I think it’s obvious that more and more states are going to come over to the other side,” said Giacobbe. “They might not call it ‘Medicaid expansion’ – they might call it something else to get it pushed over the goal line.”

“As Ralph says, it’s clearly all politics at this point,” agreed Frank Morgan, the managing director of healthcare services equity research at RBC Capital Markets. “To some degree, it’s kind of amazing that we haven’t figured this out yet.”

http://www.tennessean.com/article/20140122/BUSINESS/301220184/