New Study: States That Don’t Expand Medicaid Are Hurting Themselves | KCUR

New Study: States That Don’t Expand Medicaid Are Hurting Themselves

Jun 10, 2016

Ozarks Community Hospital has hospitals and clinics in southwest Missouri, a state that has not expanded Medicaid, and in northwest Arkansas, a state that has expanded Medicaid. CEO Paul Taylor describes his organization as a 'living experiment' that has seen revenue improve in Arkansas but drop in Missouri.
Credit Ozarks Community Hospital

A new study by Georgetown University's Health Policy Institute finds stark differences between states that have expanded Medicaid eligibility under the Affordable Care Act and those — like Kansas and Missouri — that haven’t.

Researchers conducted interviews with leaders of major hospital systems and federally qualified health centers in seven states. Three of the states had not expanded Medicaid (Missouri, Tennessee and Utah), while the other four (Arkansas, Colorado, Kentucky and Nevada) had. The goal was to see the effect on the health care delivery system in each state.

Since a 2012 Supreme Court ruling made Medicaid expansion optional for states, 19 have opted not to expand eligibility.

Expansion would extend health coverage to an estimated 150,000 Kansans who make less than 138 percent of the federal poverty level, which is annual income of $16,242 for an individual and $33,465 for a family of four. In Missouri, 452,000 more people would be covered if Medicaid were expanded.

Gov. Sam Brownback and other Kansas legislative leaders remain opposed to Medicaid expansion, as does Republican-majority Missouri legislature.

Jack Hoadley, one of the Georgetown researchers, said during a Wednesday conference call on the study that hospitals and clinics in expansion states had far fewer patients who couldn’t pay for their care, meaning the facilities were much stronger financially.

The additional financial resources led to better relationships with other health providers and better coordination of health care services, he said, and health systems in expansion states were more likely to have the resources needed to integrate behavioral health care with primary care.

“Often the results we see in a study are somewhat ambiguous,” Hoadley said. “You see some factors pointing you in one direction, some factors pointing you in another direction. But this is a case where we really saw consistently and dramatic differences between what we were being told by the executives who worked in facilities in Medicaid expansion states versus those who came from non-expansion states.”

One of the executives interviewed for the study was Paul Taylor, CEO of Ozarks Community Hospital, a safety net provider based in Springfield, Missouri. The organization has hospitals and clinics in southwest Missouri, which has not expanded Medicaid, and across the border in northwest Arkansas, where Medicaid eligibility was expanded in 2014.

“We’re also a living experiment because our patient payer mix is 90 percent governmental and uninsured,” Taylor said. “The bargain of the Affordable Care Act was supposed to be that you’re ultimately going to get paid less by the governmental payers — by Medicare, and to some extent by Medicaid — in exchange for which a large percentage of your uninsured patients were then going to be covered under Medicaid.

“Hospitals that have a large commercial insurance patient payer mix were able to soften the blow in non-expansion states. Those like OCH that did not were hit the hardest.”

Before Medicaid expansion, 33 percent of the emergency room patients at Taylor’s hospitals in both Missouri and Arkansas were uninsured. With Medicaid expansion, that figure has fallen to around 10 percent in Arkansas. Meanwhile, the uninsured rate among ER patients in Missouri has ticked up to at least 40 percent, he said.

As a consequence, Taylor cut the number of full-time employees at his organization’s Missouri hospital by about 100. A similar number of employees have been added at the Arkansas hospital.

“We hung on, frankly, as long as we could in Missouri, waiting for the Legislature to change its mind about expansion, but we finally just simply had to give up,” Taylor said. “If we hadn’t reduced our payroll in Missouri, we were jeopardizing the entire system. … If it weren’t for the positive operating margin we’re experiencing in Arkansas, the entire system would be out of business.”

Taylor said Ozarks Community Hospital made a commitment to integrated medical and behavioral care. Psychologists are stationed in the medical clinics so they can provide same-day mental health care for patients found to have behavioral needs during a regular medical check-up.

“We’re doing it, even in Missouri, even though a number of the patients that are getting that model of care are uninsured, and so we’re simply covering the cost,” he said. “And, frankly, the way we’re covering the cost is because we have a positive operating margin in Arkansas. So, the expansion state is benefiting Missouri to a certain extent simply because we’re able to continue the mission because we’re making a little bit of money down there.”

Taylor also said he sees a cross-border “brain drain.” Providers who have a choice are opting to practice in Arkansas, the state they perceive as having a brighter economic future.

The mood among hospital administrators from Missouri and Arkansas is as different as night and day, Taylor said.

“It’s gloom and doom with my fellow small and rural hospital administrators in Missouri. They’re all just hanging on,” he said. “And none of them are optimistic that there’s going to be Medicaid expansion in the state of Missouri.”

But things are looking up in Arkansas. He recently replaced the radiology equipment at a hospital in Gravette, Ark., at a cost of close to $3 million.

“There’s no way I guarantee an expenditure like that for my hospital down there unless I’m real confident that the future looks bright,” Taylor said. “There’s an imaginary dividing line in the border between Missouri and Arkansas, but there’s a real qualitative difference in what’s going on in health care right now.”

Bryan Thompson is a reporter for KHI News Service in Topeka, a partner in the Heartland Health Monitor team.