Gov. Robert Bentley responded to a report regarding possible future financial struggles for Alabama hospitals if the state doesn't expand Medicaid eligibility under the Affordable Care Act.
When asked specifically about whether he thought hospitals could face dire financial straits due to decreased federal Medicaid funds, Gov. Bentley said "Do I worry about some hospitals? Yes, I do. But most hospitals can survive if they operate efficiently."
The governor also added that if hospitals showed more restraint in purchases of other hospitals with the hopes of turning profits, then they would have more money left over to actually care for patients.
A recent study by Fitch ratings revealed that due to decreases in federal Medicaid funds, specifically for what are known as Disproportionate Share Hospital Payments, hospitals in Alabama could receive less money than in the past from the federal government. DSH payments come from the Centers for Medicare and Medicaid Services in Washington for hospitals in states that serve large uninsured or Medicaid populations.
More than 15 percent of the residents in the state of Alabama are uninsured coupled with approximately 23 percent that are covered by Medicaid. Half of all babies delivered in Alabama are paid for by Medicaid
The ACA decreased the DSH payments because the premise was that hospitals wouldn't need the additional funds because more people would be covered by health insurance. When the U.S. Supreme Court made Medicaid expansion optional for the states and not required by law that put the likelihood of more insured individuals in flux.
Danne Howard with the Alabama Hospital Association said due to the decreased DSH payments it leaves many hospitals in the state with looming financial troubles.
"We have some hospitals that really do not know what their futures involve," Howard said during an interview last week. "We absolutely have some hospitals that are fearful for what the future may hold and quite frankly not sure that they can sustain these types of cuts."
Howard added that Medicaid expansion would change the economics for many hospitals because hospitals would, in theory, be spending less on uncompensated care.
Gov. Bentley did say that decreased DSH payments concern him as an issue for hospitals.
"If they lose the disproportionate share, this will hurt the hospitals," Gov. Bentley said.
The governor downplayed the significance of the cost of uncompensated care for hospitals.
"The hospitals are already taking care of these patients right now. Doctors do not turn patients away if they don't have money and hospitals can't turn patients away if they don't have money so they are being taken care of at the present time," Bentley said.
According to the Alabama Hospital Association, hospitals spent more than $400 million on uncompensated care last year and that figure is expected to rise in coming years. Expansion would cost the state of Alabama an estimated $700 million total over six years.
Under Medicaid expansion individuals in Alabama with household incomes of less than 133 percent of the poverty line, roughly a family of four that makes less than $32,000 per year, would be eligible for Medicaid. For the first three years, the federal government would cover the entire cost of the expansion population and decrease its share to 90 percent by 2020. The state would cover the balance.
Alabama would receive approximately $1.2 billion starting in 2014 to cover an estimated 300,000 new eligible Medicaid recipients.
The deadline for Alabama to expand Medicaid in order to receive funding for 2014 is Dec. 31.
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