Medicaid funding is a top concern this year for health system executives as legislators mull potential cuts to balance the budget.
Republicans released a budget proposal early this year seeking $880 billion in savings from federal healthcare spending. However, President Donald Trump’s budget proposal released in May didn’t include any Medicare or Medicaid cuts, and House Republicans dropped two proposals to cut Medicaid funding from their budget reconciliation plan in May: the per capita caps on Medicaid funding and reducing federal assistance to Medicaid expansion states.
However, Republicans still aim to save $880 billion and Medicaid is the primary target, according to The Hill, with potential work requirements. The uncertainty around Medicaid funding has health system executives planning for the worst.
“As the CFO of a safety net health system, my billion dollar question is how much is governmental reimbursement going to decline – especially Medicaid – and how will commercial payers step up to fill the gap?” said John Mallia, interim CFO of Arnot Health in Elmira, N.Y.
Michael Antoniades, president of UChicago Medicine Ingalls Memorial sees the possible Medicare and Medicaid cuts as having a “catastrophic impact on hospital stability,” but doesn’t see much hope from commercial payers either.
“Private insurers exacerbate the crisis by denying claims at unprecedented rates, choking cash flow as hospitals provide expensive care without reimbursement,” he said. Coupled with other uncertainties, including staffing shortages, rising supply expenses and 340B cuts, Mr. Antoniades sees vulnerable hospitals struggling with “deep financial issues that many will not be able to recover from.”
Rural healthcare providers are on especially high alert, with a high percentage of the patient population benefiting from Medicaid.
“The big question facing leadership teams like ours that lead rural health systems in impoverished regions of the country is how we continue to provide the types of care our citizens need in a cost-effective and accessible manner while facing funding cuts at the state and federal level,” said Albert Wright, Jr., president and CEO of WVU Medicine in Morgantown, W.Va.
Patients at WVU Medicine already have big challenges; West Virginia has a higher than average rate of obesity, cancer, diabetes and other chronic illnesses and patients have to travel long distances to receive specialized care. Mr. Wright and his team are identifying ways to bring care closer to home for these patients and sustain funding for operations.
“With cuts to everything from Medicaid to research into more effective treatments for the conditions that most plague our state and region, how we sustain that in the long-term and in the face of an increasingly aging population is one of the issues that keeps us up at night,” said Mr. Wright. “With so much uncertainty, there’s no clear answer right now, but we’ll have to remain steadfast in our commitment to ensuring that our patients have access to the care they’ve come to expect from us.”
The uncertainty weighs heavily on leadership teams, even as they acknowledge the current system’s imperfections.
“While there is widespread consensus on the urgent need for reform, progress is often hindered when initiatives are launched without sustained support, only to have critical resources withdrawn midstream,” said Marie Langley, CEO of Desert Valley Medical Group in Victorville, Calif. “The inconsistency not only undermines long-term planning, but also places immense strain on healthcare systems that are already stretched thin. As we navigate these shifts, adaptability becomes essential–especially for organizations committed to serving vulnerable populations.”