Hospitals should buy uninsured coverage through exchanges

That the bulk of the Affordable Care Act will be enacted with millions of poor Americans shut out of an expanded Medicaid program is starting to toll on the consciences of some of the people who helped make that possible.

At the moment, two of the most populous states in the Midwest--Ohio and Michigan--have Republican governors who support expansion, but far-right Legislatures trying their darnedest to make sure it doesn't come up for a vote. In Michigan, the Legislature abruptly adjourned for the summer rather than take up the issue for debate. Similar stall tactics are occurring in the Ohio statehouse.

After the Michigan lawmakers abruptly took their summer break, Gov. Rick Snyder asked his constituents their feelings on entering an emergency room and seeing "chair after chair of working poor people--hard-working people--knowing that's their healthcare system, when we could have given them a better answer."

Ohio Gov. John Kasich said he remonstrated one recalcitrant lawmaker with this warning: "When you die and get to the meeting with St. Peter, he's probably not going to ask you much about what you did about keeping government small, but he's going to ask you what you did for the poor. You'd better have a good answer."

Excellent points. And if both politicians hadn't spent years marginalizing Medicaid expansion by stripping benefits from existing enrollees and telling voters financing the program is interfering with the tax cuts promised them, I might have some sympathy for their plight.

Indeed, I might even have less sympathy for the hospital lobbying groups in Ohio and Michigan. Neither has been particularly vocal about the fiscal damage inflicted on their membership by not participating in expanding Medicaid. The Ohio Hospital Association didn't even officially acknowledge its support for expansion until last August--two and a half years after healthcare reform was signed into law. The Michigan Hospital Association has done a slightly better job, but even the website it created to champion expansion pronounced on its homepage that the ACA is the proverbial houseguest who's never leaving.

Such spiritied defenses of the ACA may be among the reasons just 21 states are officially onboard with Medicaid expansion.

But there is a potential solution for those hospitals in states that won't expand Medicaid: Purchase insurance for their patients through their respective health insurance exchanges.

The cost of the poorest patients is so heavily subsidized by upfront tax credits that coverage could probably be had for around $100 a month or less in many cases. So, $5 million--a drop in the bucket for larger providers such as Henry Ford Health System and the Cleveland Clinic--would buy coverage for about 4,000 people.

Hospitals could use their EMR systems to identify uninsured heavy users of their emergency rooms and approach them first. They could then work their way down the list, offering a sliding scale of premium payments based on a patient's income. They could also consign funding to their charitable foundations to help purchase the subsidized coverage, with the foundations soliciting grants to help buy even more coverage.

To those hospitals insisting this is an expenditure that would saddle them with huge costs unrelated to providing care, I suggest they look at California, where inpatient providers imposed hundreds of millions of dollars of taxes on themselves in order to leverage more Medicaid dollars from the federal government. Arizona, an arguably redder state than Michigan and Ohio, is planning on doing the same to help expand its Medicaid program under the ACA. And in Iowa, hospitals agreed to cover a portion of the state's bill should the federal government renege on its promise to subsidize Medicaid expansion fully for the first three years and 90 percent after that.

Moreover, the coverage offered through the exchanges is coming from commercial insurers. That means in most cases, the reimbursement levels for care will be substantially higher than Medicaid. It therefore makes even better financial sense to do this than come up with gimmicks to leverage more Medicaid dollars. It also won't require a waiver from the Centers for Medicare & Medicaid Services.

This is not a perfect solution--in many rural areas, insurers won't be offering exchange plans at all, meaning its inhabitants won't qualify for subsidies. The already strapped rural and critical access hospitals likely wouldn't have the resources anyway to purchase coverage for significant numbers of people.

But I believe this is a practical response for hospitals in down-and-out cities such as Detroit or Youngstown, Ohio that have been financially battered by large numbers of uninsured patients for years. And should this proposal ever be used, I will no longer have to keep on hearing governors such as Snyder and Kasich spew self-righteous indignation over a situation they helped exacerbate in the first place.  - Ron (@FierceHealth)

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