As hospitals enter the last few months of the second year of broader health insurance coverage under the Affordable Care Act, facilities have enjoyed an unprecedented influx of patients and corresponding revenue.
Hospitals are caring for millions of newly insured patients who have purchased subsidized coverage on government-run exchanges since January of last year. In addition, 30 states plus the District of Columbia have exercised the law’s option to expand Medicaid insurance for poor Americans, which means more patients can now pay their bills at hospitals.
But the boom in patients may be subsiding for the rest of the year, new industry reports indicate, as fewer states agree to expand Medicaid. Meanwhile, government payments are shifting away from hospitals to outpatient care settings.
Fitch Ratings, in a new report, said it expects slower growth in "patient volumes" in the for-profit hospital sector for the rest of this year. Because they report earnings publicly, for-profit hospital operators like
“The positive implications of the ACA-related insurance expansion gained momentum starting in the second half of 2014, and the effects on the hospital industry should be durable,” Fitch said in a new report. “However, due to a decreasing pace of coverage expansion, the magnitude of the tailwind to levels of uncompensated care and patient utilization of healthcare services is logically tapering.”
Through hospitals have enjoyed many new patients, they remain under pressure from employers, private insurers and payment shifts under the health law to keep people healthy and out of inpatient settings. This means more hospital revenue will come from the outpatient side of the business, which generates less revenue.
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In addition, the political environment heading into the 2016 presidential elections means it’s less likely for state lawmakers to approve expanding Medicaid.
In the latest tally from the Kaiser Family Foundation, the organization shows the “status of state action” has only one state discussing adoption of the Medicaid expansion.
The federal government traditionally picks up a little more than half the cost of Medicaid. But funding under the health law is unlike past efforts to expand Medicaid in that the federal government will pick up the full tab this year as well as 2016. The state gradually has to pick up some costs in 2017, but by 2020, the federal government is still picking up 90% or more of the Medicaid tab.
“Financial incentives and willingness of the federal government to negotiate flexible terms of Medicaid expansion with state governments increase the likelihood that more states will opt to expand eligibility,” the Fitch report indicates. “However, these decisions occur in highly politicized arenas, making the outcome of debates difficult to predict.”
