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Medicaid Expansion Helps Hospitals Reduce Debt

The Affordable Care Act Medicaid expansion is helping hospitals reduce their debts:

Since the Affordable Care Act’s first open enrollment in 2013, the number of Americans covered under Medicaid has risen by 21 percent, to 71.1 million.

Nonprofit hospitals in the 30 states that expanded Medicaid reported on average 13 percent less bad debt from unpaid bills last year, according to Moody’s Investors Service. In contrast, according to Moody’s, such “hospitals in non-expansion states saw bad debt increase through much of the year.”

Hospitals in Medicaid expansion states, according to Kaiser, reported an average 32 percent decrease in uninsured patients and a 40 percent cut in unreimbursed costs of care for patients without the ability to pay, known in the industry as charity care costs. In non-expansion states, the number of uninsured patients declined by 4.4 percent and charity care costs dropped by 6.2 percent [Robin Respaut, “Some Public Hospitals Win, Others Lose with Obamacare,” Reuters via Yahoo News, 2015.07.23].

Less debt means more resources available for care. More debt or even the same amount of debt on one’s ledger makes it harder to compete for financing with other players who are reducing their debt. Such is the financing bind for hospitals in states like South Dakota that haven’t expanded Medicaid:

…[P]ublic hospitals in those states, many of which rely on bond markets for funding, are likely to feel the pinch even more acutely over time, experts said.

“Providers in these states are going to be at a disadvantage,” said Jim LeBuhn, senior director at Fitch Ratings. “It’s going to make it that much more challenging for these providers to maintain their financial profiles” [Respaut, 2015.07.23].

The link between Medicaid expansion and better financial performance isn’t rock-solid:

Moody’s says the decline in bad debt is credit positive, but hospitals in the expansion states have not comprehensively shifted this lessened exposure into higher cash flow, or materially better financial results than non-expansion states.

“A reduction in bad debt will not result in stronger margins by itself. Other factors, particularly the overall economic environment and hospitals’ ability to control other expenses, has a larger impact on financial performance, ” Steingart says [Moody’s Investor Service, “Affordable Care Act’s Medicaid Expansion Linked with Decline in US Hospitals’ Bad Debt,”, 2015.06.03].

…but hospitals in states expanding Medicaid have a financial opportunity that hospitals in non-expansion states do not.

Oh yeah, and they are helping more sick people get well.

Governor Dennis Daugaard thinks South Dakota’s credit rating is a big deal. But he apparently can’t expand Medicaid or his thinking to help South Dakota hospitals.


  1. Mr. Sol 2015-07-26

    Governor Daugaard has been firm on this issue. As a result, I don’t see this as changing under his administration.

  2. jerry 2015-07-26

    Governor Daugaard is a tool fool for his corrupted party. The facts are a stubborn thing, but they are not obstinate like him. He will get his rewards for carrying the water for the time being, but when it is proven, beyond reasonable doubt, that he and his equally crooked legislature are responsible for the closings of hospitals along with the blood on their hands for this insanity, he will pay the price.

    Obamacare complete with Medicaid Expansion, have done wonderful things to strengthen our sick medical dispersal system. This does not fit with Daugaard’s right wing view of being our neighbors keeper. This is something they scorn because it makes it difficult for them to steal from.

    Chris Hayes reported this regarding Medicare and how it has been strengthened by Obamacare complete with Medicaid Expansion. The media has difficulties reporting this because it goes against corporate interests. Here is what he says:

    “The most important long term driver of the federal government’s cost is Medicare,” Chris Hayes said. “If Medicare and health care cost continue to grow at insane rates year over year, we are basically fiscally screwed. If its cost curve comes down considerably, we are fine. Literally those are the stakes. Screwed, fine, depending on how those curves go. And here is what’s happened. The blue line in this chart is the projection for Medicare as a percentage of the economy, the GDP and it shows Medicare cost flattening out at about 6% of GDP all the way through 2080 according to the latest trustee’s report on the financial health of Medicare. Look at the red line. That was the projection back in 2005 which showed Medicare climbing and climbing and climbing through 2070 at a rate more than twice as bad. In other words Medicare is now projected to cost half as much, half as much over the coming decades. This is based on a mountain of information projection some of which could of course change like the actual cost of future medical procedures. But you get the picture. The primary new factor between then and now is Obamacare and the effect it may be having on slowing runaway medical cost. So the sky is not falling in other words. But don’t expect to hear that anywhere else.”

    Don’t listen to Daugaard or Bush nor the rest of the crooks and liars, they only want your Social Security and your health in general to make you enslaved to their greed.

  3. Jeff Barth 2015-07-26

    Medicaid expansion would benefit our state. Avera and Sanford favor it. Minnehaha County is billed millions for indigent health care. Those costs would reduce with expansion.

    By the way, South Dakota taxpayers, you cover those county costs.

  4. jerry 2015-07-26

    South Dakota taxpayers have not figured that out yet Mr. Barth. For the most part, taxpayers tend to think that is not the case as they have been told differently by their legislators. They only see the black dude with the African name in the white house so they don’t want to believe the facts. All their corrupted officials have to say is that you can buy more guns and more ammo so you can foregetaboutit when it comes to who pays for indigent care as that is not as important as having an armory in your basement. Daugaard and crew know their voters well.

  5. leslie 2015-07-26

    I visited w/ a “minority” MD at the 4th party and is a dem. but was asking questions like a repub. untapped democratic leadership anyone?

    lets find “you 18,000 m***rf*ers out there” and start a real, kick-ass, confrontational democratic party membership that WORKS individually for change!! country joe McDonald-1st Woodstock, 1969

    Mr. Mills and his people don’t have the job to confront racism and humanity at every turn, WE DO!!! they have been doing it at considerable risk and cost for generations.

  6. MD 2015-07-26

    Hate to share this, but North Dakota has been experiencing higher than expected costs with its Medicaid expansion –
    According to the article, despite the setback, Medicaid Expansion isn’t going anywhere.
    Any republican in SD catching wind of this would certainly take some of the wind out of the sail of SD Medicaid Expansion.
    That said, even in a red state, North Dakota has realized the value of reducing the bad debt of its hospitals. This takes on even more gravity when you consider the impact that charity care can have on rural hospitals.

  7. leslie 2015-07-26

    with about 60k new jobs since oil became recoverable since 2008, i would say so, yes, the medical care system has gotten hammered thru june 6, 2013. fiscaltimes.

    s. dakota shares only one thing w/ n. dakota, obviously.

  8. leslie 2015-07-26

    16:12 reference to olympian, billy mills, in clarification referencing the racism thread today.

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