Health-care laws are in flux, and no one can be entirely certain where all the pieces may fall or what the results may be in the short or long term. For that reason, it is essential that policymakers and health-care providers listen closely as concerns surface, alert to both the potential for unintended consequences and to remedies that would avert undue damage to the structure and quality of health care. Ohio’s children’s hospitals are making a strong case for redress. They deserve a favorable hearing.
For most of this year, a broad coalition has waged a justified campaign for Ohio to accept the federal option to expand Medicaid. Hospitals, including the state’s six children’s hospitals, pushed hard for the expansion, correctly citing the many health and economic benefits to be gained from billions of dollars in federal health spending coming to the state. Gov. John Kasich has found a way to make the expansion happen.
Unfortunately, progress on that front threatens major financial headaches for children’s hospitals. Aiming for a more efficient, cost-effective Medicaid program, state leaders are scaling down over several years payment rates to hospitals. Anticipating federal funding for Medicaid expansion, the governor’s two-year budget included 5 percent reductions in reimbursements for Medicaid inpatient and outpatient care, in addition to adjustments to the funding formula for hospital capital projects. With an expansion likely now, the proposed cuts are back. Children’s hospital administrators reckon these cuts will cost their institutions $68 million in 2014-15.
The contention is that the expansion will help offset the revenue loss for hospitals. The trouble is, not all hospitals will gain equally from the projected influx of patients and funds. The expansion primarily targets uninsured and low-income adults. With very few exceptions, they will receive care from adult hospitals. Children’s hospitals thus are not likely to see large numbers of patients to help offset lost revenue.
Besides, the hospitals have done a stellar job of enrolling Medicaid-eligible children over the years, leaving a tiny pool of children — an estimated 1.7 percent — who might yet enroll. The assumption that the individual mandate in the Affordable Care Act would trigger “the woodwork effect,” bringing out hordes of eligible enrollees may be realistic for adult hospitals but does not hold for children’s hospitals.
Roughly 51 percent of patients served by children’s hospitals are on Medicaid. As it is, Medicaid services are reimbursed at significantly lower rates than private insurance or Medicare. Cuts based on assumptions of new Medicaid funding puts these institutions at an even greater disadvantage. They should not bear the brunt of a policy that serves the interest of all Ohio.