Hospitals in states that expanded Medicaid generally expected to see fewer unpaid bills and more covered customers, but Moody’s found this hasn’t translated into improved operating margins or more cash flow. Instead, financial performance largely improved across all states, including Republican-led states that opted out of Medicaid expansion.
Hospitals in expansion states saw unpaid bills drop by an average of 13 percent in 2014 compared with 2013, Moody’s found. However, hospitals’ operating margins didn’t increase any more than the hospitals in the 22 states that did not expand Medicaid, according to the report.
“Clearly, reducing bad debt is positive, but it is not this silver bullet,” Daniel Steingart, a Moody’s analyst and author of the report, told The Wall Street Journal. Mr. Steingart said the findings call into question “a narrative out there that Medicaid expansion has lowered bad debt and that is driving [financial] improvements at hospitals.”
After Illinois expanded Medicaid, enrollment grew by about 500,000. According to Michael Kasser, CFO of Herrin-based Southern Illinois Healthcare, the health system saw a significant decrease in unpaid hospital bills, but a massive increase in Medicaid patients. Mr. Kasser told The Wall Street Journal Southern Illinois Healthcare’s hospitals saved approximately $9 million in unpaid bills, but incurred around $28 million in costs for treating Medicaid patients, of which only about half was reimbursed.
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