By Mara Lee | May
25, 2017
The end of Medicaid as an entitlement program is coming, providers
and political observers say. Now the question is how much will the federal
government seek to reduce its spending on the insurance program that covers 70
million people—and how much will senators listen to providers who say that care
could ultimately become unattainable for people if the House version of a per
capita cap is approved.
The American Health Care Act, passed by the House in early May, aims to cut federal spending on Medicaid by $834 billion by 2026, and it's hard to know exactly how that will play out for patients and providers, said Grady Health System CEO John Haupert.
"You would have to look at every channel Medicaid flows through," he said. "Long-term care. Outpatient—what will be covered? What won't? It has to come from somewhere."
Grady sees 650,000 visits each year at six clinics and a specialty HIV/AIDS clinic, and has 27,000 inpatient admissions. It also has a 300-bed skilled-nursing facility. The vast majority of patients in the nursing home are covered by Medicaid, and 30% of all patients are enrolled in the program.
What he knows is that Georgia isn't going to step in and increase funding to replace the declining federal share.
Combined state and federal spending on Medicaid in Georgia is about $4,000 a person, 48th in the country. "There's a reason why we're 48th, put it that way," Haupert said of the state's willingness to spend on medical care for the poor.
Cleveland's MetroHealth system has about 280,000 patient visits a year, with half covered by Medicaid. Dr. Akram Boutros, CEO of the public hospital and its health system, fears that what will be left for Medicaid will not be enough to cover the cost of treating the population, which tends to have a higher disease burden than the general population.
Boutros understands that providers need to find ways to bend the cost curve, whether in Medicaid or any other patient group, noting that the health system did a medical home demonstration with 28,000 Medicaid expansion patients in 2013 that resulted in $41 million in reduced costs. Ohio cut payments for outpatient Medicaid services by 5% in 2016.
"And remember," he said, "We've been through this before. The American hospital system was asked to take Medicare cuts to fund Medicaid expansion."
Katherine Hayes, director of health policy at the Bipartisan Policy Center, agreed. "Providers were asked to pay for a lot of the health reform, and now they're paying for it again—more than paying for it again—with less coverage."
Hayes, who worked for both Democrats and a moderate Republican senator in her time on the Hill, said the structure of a per capita cap isn't necessarily a problem, it's how much the federal government aims to reduce its share of spending.
"When you are putting in $834 billion in Medicaid cuts, you cannot make up the difference by scaling back eligibility of the Medicaid expansion," she said.
Georgia never did a Medicaid expansion, which Grady estimates would have brought $25 million in revenue to the system. Still, Grady reduced its uncompensated care by $68 million, going from the equivalent of 41% of total revenue to now 28%. The system hired navigators to get qualified patients enrolled in Medicaid.
Because the ACA's phaseout of disproportionate-share hospital payments was delayed, Grady still receives $80 million a year. The phaseout would have reduced it by $45 million a year.
To soften the blow of Medicaid cuts, House GOP leaders would make disproportionate-share payments permanent, for a nationwide price tag of $43 billion. Haupert said that would not nearly make up for the effects of the per capita cap.
When he was lobbying in Washington against the AHCA, he asked a Georgia Republican lawmaker why the savings couldn't come both from Medicare and from Medicaid. He said the member replied: "If you mess with Medicare, you don't get re-elected; if you mess with Medicaid, no one really cares. "
Haupert said as he sees the political backlash against the AHCA, it seems that sentiment's not totally wrong. Nearly all of the focus has been on the individual market, which is 4% to 5% of his system's patients. Will people in the individual market who are sick have access to insurance they can afford to buy? Will modest-income older customers be able to buy plans?
He said he knows many people whose parents' nursing home or other long-term care costs have exhausted their savings, ultimately sending them to Medicaid. Most people never think that will be them, he said, and many wrongly assume Medicare pays for assisted living and nursing home stays.
Still, Haupert believes senators are open to hearing from providers about what kinds of changes are too radical for the system.
"I think in general the Senate is doing a bit more due diligence around this," he said. "I still sense this high level of pressure to get it done, get it done. When you're in a hurry, that's when you make mistakes."
Hayes said she believes providers' lobbying will make a difference. And, she said, senators are paying attention to the Congressional Budget Office's scoring that showed the changes to the ACHA did little to move the dial on the number of people who would become uninsured. The most recent report estimated that 23 million people would lose coverage by 2026; scoring of the original bill in March put the number at 24 million.
Besides the direct financial implications for providers, the potential loss of coverage poses another challenge, says Dr. Nick Turkal, president and CEO of Aurora Health Care, a 15-hospital system based in Milwaukee. "The other thing that concerns me is that we'll be going back to people coming to the emergency department in a crisis rather than getting the care they need in preventive services and primary-care services. That's not an efficient way of getting care," he said.
Haupert said he hopes the per capita cap allows below-average spending states to catch up to more generous states, or at least that there will be special consideration for safety-net systems like his. For Grady, the cuts to Medicare were very minor, just $8 million in the last four years. "Our margin, with county support, is around 4%," he said, and they received $55 million from the counties they serve last year. "Without county support we'd be at about a negative 1%."
He said when he talks with county officials about what's happening in Washington, he can see they fear if the federal government steps back, then the bill will come due first to states, and then, they're asking themselves, "Is this going to land in our lap?"
The American Health Care Act, passed by the House in early May, aims to cut federal spending on Medicaid by $834 billion by 2026, and it's hard to know exactly how that will play out for patients and providers, said Grady Health System CEO John Haupert.
"You would have to look at every channel Medicaid flows through," he said. "Long-term care. Outpatient—what will be covered? What won't? It has to come from somewhere."
Grady sees 650,000 visits each year at six clinics and a specialty HIV/AIDS clinic, and has 27,000 inpatient admissions. It also has a 300-bed skilled-nursing facility. The vast majority of patients in the nursing home are covered by Medicaid, and 30% of all patients are enrolled in the program.
What he knows is that Georgia isn't going to step in and increase funding to replace the declining federal share.
Combined state and federal spending on Medicaid in Georgia is about $4,000 a person, 48th in the country. "There's a reason why we're 48th, put it that way," Haupert said of the state's willingness to spend on medical care for the poor.
Cleveland's MetroHealth system has about 280,000 patient visits a year, with half covered by Medicaid. Dr. Akram Boutros, CEO of the public hospital and its health system, fears that what will be left for Medicaid will not be enough to cover the cost of treating the population, which tends to have a higher disease burden than the general population.
Boutros understands that providers need to find ways to bend the cost curve, whether in Medicaid or any other patient group, noting that the health system did a medical home demonstration with 28,000 Medicaid expansion patients in 2013 that resulted in $41 million in reduced costs. Ohio cut payments for outpatient Medicaid services by 5% in 2016.
"And remember," he said, "We've been through this before. The American hospital system was asked to take Medicare cuts to fund Medicaid expansion."
Katherine Hayes, director of health policy at the Bipartisan Policy Center, agreed. "Providers were asked to pay for a lot of the health reform, and now they're paying for it again—more than paying for it again—with less coverage."
Hayes, who worked for both Democrats and a moderate Republican senator in her time on the Hill, said the structure of a per capita cap isn't necessarily a problem, it's how much the federal government aims to reduce its share of spending.
"When you are putting in $834 billion in Medicaid cuts, you cannot make up the difference by scaling back eligibility of the Medicaid expansion," she said.
Georgia never did a Medicaid expansion, which Grady estimates would have brought $25 million in revenue to the system. Still, Grady reduced its uncompensated care by $68 million, going from the equivalent of 41% of total revenue to now 28%. The system hired navigators to get qualified patients enrolled in Medicaid.
Because the ACA's phaseout of disproportionate-share hospital payments was delayed, Grady still receives $80 million a year. The phaseout would have reduced it by $45 million a year.
To soften the blow of Medicaid cuts, House GOP leaders would make disproportionate-share payments permanent, for a nationwide price tag of $43 billion. Haupert said that would not nearly make up for the effects of the per capita cap.
When he was lobbying in Washington against the AHCA, he asked a Georgia Republican lawmaker why the savings couldn't come both from Medicare and from Medicaid. He said the member replied: "If you mess with Medicare, you don't get re-elected; if you mess with Medicaid, no one really cares. "
Haupert said as he sees the political backlash against the AHCA, it seems that sentiment's not totally wrong. Nearly all of the focus has been on the individual market, which is 4% to 5% of his system's patients. Will people in the individual market who are sick have access to insurance they can afford to buy? Will modest-income older customers be able to buy plans?
He said he knows many people whose parents' nursing home or other long-term care costs have exhausted their savings, ultimately sending them to Medicaid. Most people never think that will be them, he said, and many wrongly assume Medicare pays for assisted living and nursing home stays.
Still, Haupert believes senators are open to hearing from providers about what kinds of changes are too radical for the system.
"I think in general the Senate is doing a bit more due diligence around this," he said. "I still sense this high level of pressure to get it done, get it done. When you're in a hurry, that's when you make mistakes."
Hayes said she believes providers' lobbying will make a difference. And, she said, senators are paying attention to the Congressional Budget Office's scoring that showed the changes to the ACHA did little to move the dial on the number of people who would become uninsured. The most recent report estimated that 23 million people would lose coverage by 2026; scoring of the original bill in March put the number at 24 million.
Besides the direct financial implications for providers, the potential loss of coverage poses another challenge, says Dr. Nick Turkal, president and CEO of Aurora Health Care, a 15-hospital system based in Milwaukee. "The other thing that concerns me is that we'll be going back to people coming to the emergency department in a crisis rather than getting the care they need in preventive services and primary-care services. That's not an efficient way of getting care," he said.
Haupert said he hopes the per capita cap allows below-average spending states to catch up to more generous states, or at least that there will be special consideration for safety-net systems like his. For Grady, the cuts to Medicare were very minor, just $8 million in the last four years. "Our margin, with county support, is around 4%," he said, and they received $55 million from the counties they serve last year. "Without county support we'd be at about a negative 1%."
He said when he talks with county officials about what's happening in Washington, he can see they fear if the federal government steps back, then the bill will come due first to states, and then, they're asking themselves, "Is this going to land in our lap?"
Mara Lee covers developments in health care
policy in Congress and around Washington. This is her second time covering the
Hill. In a previous life, she covered Midwestern delegations for Scripps and
Gannett newspapers in Indiana and Michigan. Over her 20-year-plus-career, she’s
spent more time outside the Beltway, both as a business reporter for The
Hartford Courant and nine years in Ohio, mostly at the Dayton Daily News. She
won an award for coverage of Oxycontin addiction Ohio in 2003, as well as for
Census, business and breaking news coverage in Ohio and Connecticut. She’s a
Virginia native, and graduated from the University of North Carolina-Chapel
Hill. Twitter handle: MaraRhymesSarah
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