The GOP budget plan is a crisis in the manufacture of hospitals

The flagship budget of the Trump administration – which includes the largest funding reductions in Medicaid never proposed in the history of the program – is currently waiting for a vote in the Senate, after having already crossed the House of Representatives last month.

Experts believe that legislation would lead to a series of negative effects – such as millions of people losing access to care, aggravated public health, unwinding income loss for providers and higher bonuses for commercially insured patients.

Decrease in registration in Medicaid by millions

To understand why this bill will harm hospitals, it is first necessary to understand how it affects the Americans at low income. If he is signed, he would launch more than 10 million Americans from Medicaid, according to estimates of the Congressional Budget Office.

The main provision provoking that which imposes strict work requirements for valid adults aged 19 to 64. These registrants would be required to work at least 80 hours a month in order to maintain their coverage – unless they can prove that they are registered in a program of education, vocational training or treatment of drug addiction. There are also exemptions for pregnant, postpartum, recently released from prison and as full-time caregivers for disabled dependents.

Under the legislation, registrants should regularly report their working hours, which creates a high administrative burden. Many people would be at risk of losing coverage not because they do not work, but because of things like paperwork errors, inconsistent use or difficulty navigating in the declaration system.

If the bill is adopted, these requirements would start on December 31, 2026 – and would mark the first time that Medicaid’s work requirements are a federal level policy.

Only two states, Arkansas and Georgia, have implemented work requirements for the registrants of Medicaid. The Arkansas did so in June 2018 – and December 2018, more than 18,000 people lost coverage due to non -compliance. However, a federal judge ended the work requirements in 2019, invoking concerns about the losses of coverage and the alignment of the effort on the Medicaid objectives.

The Georgia work requirements program, which entered into force in July 2023, is still active. The State has planned that 100,000 people register for the new program during its first year – but only about 5,100 people participated in October of last year.

The GOP spending bill would also pass Medicaid from an annual registration process to the one who obliges the beneficiaries to register every six months – and it would cancel a policy of the Biden era which aimed to simplify registration and renewal.

In addition, the legislation aims to reduce federal counterpart funds for MEDICAIDE expansion populations of states, which can force states to reduce or eliminate extended coverage. This would also limit the capacity of states to use taxes on providers as a means of reducing federal Medicaid correspondence funds – and these two restrictions would come into force from the promulgation of legislation.

Suppliers’ taxes refer to the taxes that states impose on health care providers to help finance their Medicaid programs. These costs are a crucial financing tool that states have been using for decades to finance their share of the Medicaid program, said Char Macdonald, executive vice-president of public affairs of the American hospitals’ federation.

“The bill would freeze the taxes of service providers and the state -run payment programs, forcing states to choose between reducing critical advantages and increasing taxes on families and small businesses. Gel will hamper the capacities of states to respond to changes in the economy or health and well-being of their Medicaid population-in particular in times of crisis or disaster, “she said.

States that have not yet adopted the care managed by Medicaid or to fully develop their MEDICAIDI funding programs will be struck, noted Macdonald.

Given that the bill aims to freeze the taxes on providers and to cap the payment programs led by the State without adapting to inflation, these states will have a particularly difficult time to determine how to properly finance Medicaid, she explained. Some of these states include Alaska, Connecticut, Idaho, Montana and Nebraska.

The bill on expenditure indicates that the financing resources of States are limited in the name of the elimination of waste, fraud and abuse – but the CEO of the American Hospital Association Rick Pollack thinks that this assertion is dishonest.

“We reject this notion, because these critical, legitimate and well-established funding programs in Medicaid are essential to compensate for decades of chronic subpaids of the cost of care provided to Medicaid patients. These new policies are estimated to decimate federal support for the Medicaid program by more than $ 700 billion over 10 years and will have health coverage, “he said in a statement.

The already fragile operational margins of hospitals harm

Unhealthy people still need health care and hospitals serve all those who cross their doors, regardless of their insurance status, noted Macdonald of the American hospitals’ federation.

She pointed out that an increase in unhealthy patients will lead to more unpaid care – which will increase hospitals’ costs at a time when their expenses are already climbing regularly.

Robert Wood Johnson Foundation estimates that unpaid care will increase by $ 278 billion over the next decade if the expense bill is promulgated.

During an interview in March, Nick Olson, financial director of Sanford Health, based in southern Dakota, said that his health system had spent $ 159 million in unpaid care in only 2022. The decrease in the funding of Medicaid would lead to this figure at an even more unbearable level, he said.

Another health care expert – Seth Cohen, president of the CEDAR health billing company – has also expressed concern about what this increase in unpaid care will be in the already thin margins of hospitals.

“There could be up to 20% of the drop in operating margins for hospitals-and for those who are net safety hospitals, which mainly serve poorly served communities, we see their margins affected by 50 to 60%. They are massive tubes,” he said.

Hospitals take into account things like poor debt and invoices of unpaid patients when negotiating the rates with insurers – and this often ends up causing health costs for the average consumer, said Cohen.

In other words, the more the hospitals must be bad following unpaid care, the more they will have to increase their negotiated prices with commercial payers.

Cohen underlined the ineffectiveness of the expenditure bill. He promises to save money, but he only really makes the costs of the Medicaid program on individual patients and health systems, he explained.

Training effects through the system

In addition to increasing bonuses, the bill could also have an impact on insured people thanks to a decrease in access and quality of care, underlined Katherine Hempstead, responsible for policies for the Robert Wood Johnson Foundation.

“There are training effects of these changes that will go far beyond the people who are most immediately affected,” she said.

Hospitals faced with financial stress may be forced to reduce their endowment level, reduce services or even close their doors, said Hempstead.

This is particularly true for rural hospitals in the country, she noted, because rural providers are often financially fragile and dependent on the income of Medicaid. In rural communities, 18% of adults are covered by Medicaid.

Between 400 and 700 rural hospitals across the country run a closing financial risk – and any type of income reduction will have a drastic impact, said Hempstead.

Hospitals in rural America would also be a threat to many local savings-because rural hospitals are often one of the largest employers in their region, she added.

Overall, she thinks that the expense bill overturned the progress made by the Medicaid program in the last decade.

When the coverage is extended, more people have access to preventive care-and the downstream effects of this are elements such as improving the management of chronic diseases and reduced mortality, she explained. But the bill on the expenses that goes through the congress threatens to stop this progress before these advantages can fully settle.

Since the legislation aims to fundamentally reshape the functioning of Medicaid, it is difficult to predict the exact economic impact it will have or how long the effects will be made, said Hempstead. It expects supplier income and patient costs to be made up during the next decade if the bill is promulgated.

Experts agree that the bill would project an oppressive and continuous financial burden on service providers and patients.

They warn that these changes will not only leave millions of people without care, but also to destabilize hospitals from the financial sole, as well as costs for all patients, regardless of the status of coverage.

Photo: dkfielding, getty images