Medicaid expansion: Good for revenue, but bad for business?

Unusual circumstances may reflect New Hampshire's unique health care system

Topics: Medicaid, Reimbursement, Finance, Health Policy, Market Trends, Strategy

March 7, 2013

Dan Diamond, Managing Editor

While most providers are pushing their governors to join the Affordable Care Act's Medicaid expansion, hospital officials in New Hampshire are facing a bit of a conundrum. Opting into the law would help reduce uncompensated care and boost utilization, but could actually lower hospitals' net income, too.

That finding comes from a Lewin Group report commissioned by the state's health officials. The report, released in January, estimated that expanding Medicaid would more than halve the state's number of uninsured residents by 2020—from about 171,000 to 71,000—while growing Medicaid rolls by nearly 60,000 patients.

But that would lead to a crowd-out effect: fewer residents would purchase subsidized private insurance, which offers significantly better reimbursement for hospitals than Medicaid, the report concluded. As a result, hospitals would see a nearly $50 million swing in income based on the state's decision to participate in the expansion, Lewin Group researchers predict.

The report "was a bit of a surprise to us," Lisabritt Solsky, deputy director of the state's Medicaid program, said at the time. "But it makes sense once you understand the profile of our system."

The Lewin Group report also notes that New Hampshire's "unique characteristics"—such as an uninsured rate of 13% for the nonelderly, compared to a national average of 18%, and the state's especially low Medicaid reimbursement rate—complicate efforts to extrapolate the expansion's effects to other states.

At least one panelist at a forum on Wednesday did stress that the ACA stands to bring hundreds of millions of new dollars to New Hampshire's economy by 2020. The law's provisions represent a "significant chunk of money" for the Granite State, according to panelist Steve Norton, executive director of the New Hampshire Center for Public Policy Studies.

Meanwhile, the New Hampshire Hospital Association supports the expansion—not just because of the law's consequences for revenue, but because of its moral implications, according to the organization's top official.

"We should be encouraging people to get the right care, at the right time and in the right place," NHHA President Steve Ahnen writes in Thursday's Concord Monitor. "And we believe Medicaid expansion will help us achieve that."

Where does your state stand on the Medicaid expansion? Click to expand either a quick-to-scan graphic or an interactive graphic. (Note: interactive graphic may not be optimized for mobile devices.)

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