Cutting funds to Medicaid will have a significant impact on people's access to care, a group of Catholic, nonprofit health systems said this week.
In a Tuesday briefing hosted by the Catholic Health Association of the United States featuring members from Trinity Health, SSM Health, Providence and Ascension, hospital leaders referred to the “moral imperative” that they and Congress share to preserve the country’s safety net.
“Medicaid is not just a health program. It’s a lifeline,” said Sister Mary Haddad, the association's president and CEO. “By protecting our most vulnerable, we create a healthier, stronger society for everyone.”
The latest reconciliation bill making its way through Congress proposes changes to Medicaid such as work reporting requirements and retroactive coverage provisions. “These proposed changes threaten access to care for millions of Americans, particularly in underserved areas,” Haddad noted.
A third of Providence’s patients are on Medicaid, according to the health system's president and CEO, Erik Wexler. The federal program is also crucial for preventive care, so patients don’t get more sick and end up in the hospital.
“For potential short-term gain,” Wexler said, “we will have long-term pain, and all of healthcare will be affected by that.”
Both Providence and Trinity Health executives estimate losses of $1 billion if the Medicaid cuts come to pass. Health systems have already struggled to recover since COVID. Earlier this year, hospitals nationally had a monthly median operating margin of 4.4%. But for rural hospitals, the nationwide median operating margin is 1% or lower. Trinity Health already loses $500 million annually on Medicaid, executives said.
Health systems are doing what they can to bring down costs. Providence has cut discretionary spending and full-time equivalents. But with the proposed Medicaid cuts, the health system would face even further labor reductions, Wexler said. That could lead to programs closing.
“It resets healthcare in a way that affects the entire population,” he said.
“Access to healthcare depends on decisions being made right now in Washington,” Ascension President Eduardo Conrado said on the call. “Medicaid is not a handout. It’s a safety net.” A fifth of Ascension’s patients are on Medicaid or uninsured.
Cuts would not only impact hospital revenues but also leave nonprofit systems holding the bag for charity care. “We take care of everybody in our community, which shifts the financial burden into the nonprofits,” Conrado noted.
“When people need us, we are there. That’s why we are in Catholic healthcare,” Joe Hodges, lead regional executive at SSM Health Oklahoma, said.
Hospitals in rural areas face additional economic and operational pressures. Nearly three-quarters of hospitals operate in the red in Oklahoma and Wyoming. In Washington, 75% do, and in Kansas, 87%.
Trying to recruit providers to rural facilities is challenging any day. Losing Medicaid funding would only make that worse, explained Mike Slubowski, Trinity's president and CEO.
Trinity has had to make “painful” decisions at several rural hospitals about discontinuing OB services to date. In nearly each of its markets, the health system feels it must consolidate or develop alternatives for women and children services. “As you can imagine, the community reaction is very negative,” Slubowski said.
“It is a crisis in rural healthcare,” Hodges added. “Any challenges that are associated with taking away access or funding to rural hospitals will make them even more vulnerable.”
Increased costs would also fall on the backs of employers. If Medicaid enrollment is reduced, hospitals would need to renegotiate higher reimbursement rates with their commercial payer partners. That would raise premiums for employers, Hodges noted.
“We have to cost-shift. If we have less reimbursement, less paying patients coming through our doors, we have to then cost-shift that over to commercial insurance,” Hodges said. “It just moves from one bucket to another bucket.”
“Further cuts to Medicaid funding will create more economic chaos, because employers will not accept additional burdens for government responsibility,” Slubowski echoed.
Slubowski stressed hospitals’ willingness to engage in value-based arrangements. He pointed to the success Trinity has already had achieving better outcomes and lower costs in such arrangements across Medicare, Medicare Advantage and Medicaid. This can be very successful “if providers are given that responsibility instead of working through middlemen like insurance companies,” he said.