Michigan hospitals, like many others across the nation, were told that Medicaid expansion would not just benefit patients who couldn’t pay for their care but would also help them reduce the bad debt they previously experienced when caring for patients who had no health insurance or ability to pay. In fact, that was one of the claimed benefits promised by advocates for the Affordable Care Act, and one of the chief reasons so many in the medical community signed on as supporters of that law more than half a decade ago. When Michigan finally expanded the Medicaid program just two years ago, hospitals quickly realized those benefits. Now, however, it appears as though the actual gains were far less substantial than most experts initially believed.
First Perceptions Vs Reality
When the expansion first went into effect, there was a great deal of excitement as bad debt was reduced and the need for financial assistance to patients declined sharply. Those hospitals appeared to be reaping tremendous benefits throughout 2014, as more patients actually had insurance that paid for at least part of their care. As the government began picking up more of the tab, it looked for a time as though hospital financials might take a noticeable turn for the better.
A new report, however, calls all of that into question. The report reveals that the balance improvements hospitals should have received from treating more patients backed by insurance were at least partially mitigated by the government’s own failure to adequately pay for the care those patients received. When compared to the actual cost of the care provided, Medicaid’s payments to those hospitals were far less than expected. To make matters worse, that shortfall coincided with a continuing shortfall in payments made by the Medicare program. Together, those two government programs so dramatically underpaid Michigan hospitals that the shortfall effectively wiped out any gains the hospitals enjoyed from reducing their assistance levels and bad debt.
How Bad Was the Shortfall?
Between the two programs, hospitals experienced a payment shortfall of more than $1 billion in the 2014 fiscal year, while bad debt and financial assistance costs decreased by a combined $126 million during the same period. While there were benefits to hospitals, the trend doesn’t look positive when you examine the budget picture in the years to come.
Here’s the problem: with the expansion of Medicaid across the nation, more patients are being covered by government insurance, and that assistance has to be paid for by tax revenue. If there are already growing Medicaid shortfalls, there is no reason to suspect that the situation will get better any time in the future without massive infusions of Medicaid funds at either the federal or state levels. There is no evidence at this point in time that there is any real appetite for the additional tax increases that would likely entail. Moreover, most estimates project that the number of Americans on Medicaid will undoubtedly continue to grow as well.
That leaves hospitals in the state in a tricky situation. With expansion a reality, and shortfalls expected to continue and grow, those hospitals can expect to treat even more Medicaid patients in the coming years. As shortfalls grow while health care costs rise, the damage to those hospitals’ bottom line is going to become more and more difficult to ignore. Eventually, expansion and payment shortfalls could interact with explosive consequences for Michigan’s health care system and budgets.
That problem is exacerbated by the nation’s debt crisis. As the debt races toward the $20 trillion mark, hard choices are going to have to be made about how we fund programs like this to ensure that hospitals are not being unduly pressured by Medicaid payments that not only fail to meet the actual costs of care but also shrink over time. And with many analysts projecting that today’s payments may actually represent a high-water mark – with ever-decreasing reimbursements a virtual certainty, it is clear that sensible action needs to be taken to ensure that the health care gains that are now being realized are not sacrificed due to a failure to figure out how to pay the bills.
Your Medicaid Help
Of course, all of this puts our seniors at risk too – especially when you consider that this vulnerable group already relies on Medicaid benefits to pay a substantial amount of nursing home costs. If Medicaid budgets are left in disarray due to poor planning by legislators and bureaucrats, those seniors could find that their own benefits may decline too. And that could leave many people in need of long-term care with limited access to the funding necessary for that care.
The government may still be trying to figure out how to plan ahead for these types of problems, but the good news is that you don’t have to follow suit. No matter how legislators and others fix this problem – or fail to fix it, you still need to plan ahead for your own treatment and care needs – and that means undertaking effective Medicaid planning today. Fortunately, there are ways to ensure that you’ll be able to qualify for the benefits you need when you need them most – preserving some of your assets so that your loved ones are still cared for even if you eventually need to be cared for yourself. An experienced estate planning and elder law attorney can help you accomplish those long-term goals.
At Biddinger, Bitzer & Estelle, PLLC, our elder law experts can help you to make sense of where you stand with nursing home costs and Medicaid funding. We’ll work with you to implement the right strategies for your unique circumstances, to ensure that you protect your assets, provide security for your loved ones, and avoid costly benefit eligibility penalties that could throw your finances into turmoil. Contact us at our website or call us today at (989) 872-5601 to discover how we can help you get beyond the bleak health care news you read about in the papers and start focusing on that brighter future that sound planning can bring.