Uncompensated care costs could rise 78% at hospitals in Medicaid expansion states under AHCA

The House-approved American Health Care Act is projected to increase uncompensated care costs and decrease operating margins at hospitals, particularly those in states that expanded Medicaid under the ACA, according to a Commonwealth Fund report.

The report, issued June 23, estimates how the AHCA's Medicaid provisions could affect hospitals' finances.

Here are nine findings from the report.

1. The Commonwealth Fund projects hospitals in Washington, D.C., and the 31 Medicaid expansion states will see a 78 percent increase in uncompensated care costs over the next decade under the AHCA.

2. The report estimates 11 of these states will see uncompensated care costs at least double during that time frame. In Nevada, for instance, hospitals are projected to see a 98 percent increase. The increase would be even greater in West Virginia and Kentucky, increasing 122 percent and 165 percent, respectively.

3. The Commonwealth Fund also projects hospitals in most states will see reduced Medicaid revenues under the AHCA, "even though the law restores Medicaid disproportionate share hospital payments."

4. Hospitals in Medicaid expansion states could see Medicaid revenues fall 14 percent between 2017 and 2026. That compares to a 3 percent expected decrease among hospitals in the 19 nonexpansion states.

5. Under the AHCA, rural hospitals in Medicaid expansion states, on average, could experience an 18 percent decline in Medicaid revenue, according to the report. This compares to a 14 percent decline for all hospitals in those states.

6. The Commonwealth Fund estimates rural hospitals in 10 states — including Michigan, New Mexico, Kentucky and Nevada — would see Medicaid revenues fall more than 20 percent between 2017 and 2026.

7. In addition to declining Medicaid revenues, hospitals nationwide are expected to see declining operating margins over the next decade under the AHCA. "This decline will be especially large for hospitals in expansion states as well as rural hospitals in nonexpansion states," the Commonwealth Fund adds.

8. The Commonwealth Fund projects operating margins for hospitals in Medicaid expansion states, on average, will fall to -5.3 percent in 2026 under the House-approved bill.

9. Hospitals in nonexpansion states also are projected to have negative operating margins in 2026. For instance, the Commonwealth Fund predicts Maine hospitals' average operating margin will be -10.3 percent and Nebraska hospitals' will be -5.5 percent.

Read the full report here.

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