AUGUSTA — Maine’s hospitals got a financial checkup recently, and – thanks in part to some malpractice by state policymakers – the prognosis is bleak: For the 12-month period ending March 31, 2014, the hospitals collectively lost money, with an aggregate operating margin of minus 0.3 percent.
The analysis, prepared by the Maine Hospital Association for legislative candidates, also found that the number of Maine hospitals in the red for 2013 was double what it is in a typical year.
Health care is a critical component of Maine’s economy. In fact, hospitals are the largest employers in seven counties.
Part of the recent contraction could be a result of too much success. Maine’s hospitals are working hard at one of the core goals of health care reform: keeping people well with preventive and better-coordinated care, and keeping them out of the hospitals. While good for individuals and a brake on health care cost growth, fewer people in the hospital will inevitably put a dent in the bottom line for some hospitals.
But there’s more to this story.
The U.S. health care system is splitting in two. In the states that accepted federal funds to insure more low-income people through Medicaid, hospitals have received a welcome shot in the arm.
One multi-state health system, Tenet Hospital, reported that hospitals in states that expanded Medicaid have experienced across-the-board increases in patient volumes, surgeries and outpatient visits. These hospitals also saw a bump in emergency admissions – unsurprising, given that some working poor men and women have been uninsured for years and have pent-up health needs.
At the same time, uninsured admissions were halved in expansion states. This is important, because when patients cannot pay because they are uninsured, hospitals still must treat them – and the “free care” falls on the red side of hospital ledgers.
Hospitals in states that have refused federal Medicaid funds, including Maine, have received no such boost. The Robert Wood Johnson Foundation estimates that those states will squander more than $420 billion through 2022 – funds that would flow into their state economies, boosting hospital revenues and bringing thousands of health care jobs.
The Maine Center for Economic Policy estimates that the $338 million in federal funds that would be directed to Maine each year would add half a billion dollars annually to Maine’s economy and support 4,400 jobs staffing hospitals and caring for the newly insured.
Insurance coverage has increased most in states that expanded Medicaid and also set up their own marketplaces for private insurance. Among those states, the highest percentage-point improvements in coverage were in Arkansas (10.1 percent) and Kentucky (8.5 percent), while the average was 4.4 percent.
By contrast, states that didn’t expand Medicaid experienced a 2.4-percentage-point increase in coverage, largely because of the availability of more affordable private insurance coverage through health care marketplaces, whether state-run or federal. Maine, which is relying on the federal marketplace, fared slightly better, with a 2.8-percentage-point increase in coverage, partially because of coordinated enrollment efforts by a wide range of community organizations.
If Maine had expanded Medicaid in 2014, the level of coverage would have been greater. Instead, Maine’s hospitals continue to pick up the tab for treating thousands of people who would be eligible for coverage but remain uninsured because of Maine’s refusal to accept federal funds.
Experience from other states clearly shows that these funds could pay for needed care and boost operating margins at hospitals throughout Maine. Many rural counties, where the percentage of uninsured is higher than average, would benefit most from the new jobs tied to the health care funds.
While Maine’s governor resists, some of his fellow critics of the Affordable Care Act are recognizing their error. Republican Gov. Matt Mead of Wyoming, for instance, recently began meeting with federal officials to talk about what expanding Medicaid in Wyoming might look like.
“We’re handing (out) $200 million in free care just in Wyoming,” Mead said recently. “I contrast it with, I think it’s about $60 million this year that if we were in Medicaid, we would have received.” He plans to present his findings to the Wyoming Legislature when it reconvenes.
As a transformation in health care sweeps the nation, Maine is trapped in political amber, with many uninsured residents postponing care and hospitals losing money on those who do seek treatment. It’s unfortunate that, unlike Gov. Mead in Wyoming, some policymakers in Maine still won’t let the facts – and the numbers – convince them to remove their ideological blinders.
– Special to the Press Herald