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Lewis Braham: Political Misfires Mean Good News For Munis
" Also promised—repealing the Affordable Care Act, which subsidizes muni-bond-financed health-care facilities via Medicaid reimbursements."
This seems to be conflating two different factors - changes in Medicaid coverage (which pays for hospital services just as "regular" insurance pays for services), and changes to hospital subsidies that are made via Medicaid.
The ACA reduced the number of uninsured. The number of individuals getting insurance from private insurers (not through the government or employer) increased by several million. The number of individuals covered by Medicaid increased even more significantly.
Because many more individuals were covered, hospitals had to absorb the costs for many fewer people. If you were to remove the Medicaid expansion and eliminate the individual mandate, the number of people covered would drop, and hospital costs would regress.
Such changes in coverage would have constituted the largest impact that the AHCA would have on hospitals. But this is just changing the number of people covered, not the subsidies to hospitals (except in an indirect sense, like saying that hospitals are subsidized because people receive tax subsidies for buying insurance).
The writers of the ACA recognized that because of better coverage, hospitals would be spending less providing for the uninsured. So they put a provision into the ACA to cut actual hospital subsidies. These subsidies are called disproportionate share hospital (DSH) funding. While these cuts have been repeatedly deferred, they are currently scheduled to kick in on Oct. 1.
The AHCA (by undoing the ACA) would have restored these subsidies - the opposite of what the article seems to be saying.
On balance, the AHCA would indeed have cost the hospitals about $2B/year over the next decade, but that's more because people would have lost coverage (and thus cost hospitals more to take in as patients), than it is because of changes to subsidies (which would have been restored).
Here's a short column on Medicaid's DSH. It talks about how the SC ruling that Medicaid expansion was optional hurt the hospitals and motivated the government to delay Medicaid's DSH cuts. Medicare's use of DSH to subsidize care of the poor is a bit more convoluted (since it gradually evolved from a payment to care for higher-maintenance poor seniors to a more general payment to support hospitals serving the poor of all ages). AFAIK, these subsidies are not affected by any proposals floating around Congress now.
There are many moving parts here. A lot of effort went into ensuring that facilities were able to serve everyone regardless of economic status. It's really not fair for me to pick on a sentence or two that Lewis wrote in a space-limited column. I'm not doing the issue much justice here, either. If you care, and have the time, look through some of the links above.
@MSF You're right that there is some conflation which occurred because of limited space. I meant subsidization in the indirect sense of the number of patients covered affecting hospitals' cost structures or as you comment "like saying that hospitals are subsidized because people receive tax subsidies for buying insurance." Providing for the uninsured has long been a financial burden on hospitals, which the ACA has eased. But in a story that has to cover a lot of ground and various topics in little space nuance can often be lost.
Comments
Article also had a link to Barron's weekly mutual fund scoreboard:
barrons.com/public/page/9_0210-scoreboard.html
This seems to be conflating two different factors - changes in Medicaid coverage (which pays for hospital services just as "regular" insurance pays for services), and changes to hospital subsidies that are made via Medicaid.
The ACA reduced the number of uninsured. The number of individuals getting insurance from private insurers (not through the government or employer) increased by several million. The number of individuals covered by Medicaid increased even more significantly.
Because many more individuals were covered, hospitals had to absorb the costs for many fewer people. If you were to remove the Medicaid expansion and eliminate the individual mandate, the number of people covered would drop, and hospital costs would regress.
Such changes in coverage would have constituted the largest impact that the AHCA would have on hospitals. But this is just changing the number of people covered, not the subsidies to hospitals (except in an indirect sense, like saying that hospitals are subsidized because people receive tax subsidies for buying insurance).
The writers of the ACA recognized that because of better coverage, hospitals would be spending less providing for the uninsured. So they put a provision into the ACA to cut actual hospital subsidies. These subsidies are called disproportionate share hospital (DSH) funding. While these cuts have been repeatedly deferred, they are currently scheduled to kick in on Oct. 1.
Modern Healthcare, Billions in federal uncompensated-care funds to be cut starting in October
The AHCA (by undoing the ACA) would have restored these subsidies - the opposite of what the article seems to be saying.
On balance, the AHCA would indeed have cost the hospitals about $2B/year over the next decade, but that's more because people would have lost coverage (and thus cost hospitals more to take in as patients), than it is because of changes to subsidies (which would have been restored).
See Exhibit 3 in:
The Commonwealth Fund, The Financial Impact of the American Health Care Act’s Medicaid Provisions on Safety-Net Hospitals
Both Medicaid and Medicare have DSH programs.
Here's a short column on Medicaid's DSH. It talks about how the SC ruling that Medicaid expansion was optional hurt the hospitals and motivated the government to delay Medicaid's DSH cuts.
Medicare's use of DSH to subsidize care of the poor is a bit more convoluted (since it gradually evolved from a payment to care for higher-maintenance poor seniors to a more general payment to support hospitals serving the poor of all ages). AFAIK, these subsidies are not affected by any proposals floating around Congress now.
There are many moving parts here. A lot of effort went into ensuring that facilities were able to serve everyone regardless of economic status. It's really not fair for me to pick on a sentence or two that Lewis wrote in a space-limited column. I'm not doing the issue much justice here, either. If you care, and have the time, look through some of the links above.