Medicaid Expansion: A Shot in the Arm for Maine Hospitals and the Communities They Serve

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When people without health insurance[1] can’t afford to pay for hospital care, we all pay for it. 

In Maine, costs for those with incomes below 150% of the federal poverty level (about $18,000 for a single person) are written off as “charity care” or “free care”.[2]

In 2015, the total amount of this care delivered by Maine hospitals reachednearly $215 million dollars. For those not eligible for free care, unpaid bills become “bad debt” which hospitals attempt to collect, but often cannot.  Hospital bad debt in Maine amounted to another $290 million in 2015.[3]

The cost of this uncompensated care must be paid for somehow, so unavoidably it adds to the total cost that hospitals must try to recover from other payments.  This increases costs for people who buy health insurance on their own or contribute to employer-based coverage.  The remainder of this cost is simply absorbed by the hospital.  For about half of Maine hospitals, unpaid costs have put them in the red.

According to the Maine Hospital Association (MHA), approximately 19 hospitals are now operating in the red and many are being forced to make drastic cuts to programs their communities rely upon.[4]

Thirty-one states have taken steps to reduce hospital uncompensated care by expanding access to Medicaid. 

A study published in the Journal of the American Medical Association found that Medicaid expansion under the Affordable Care Act was associated with significant declines in uncompensated care costs and increases in Medicaid revenue among hospitals in the first 19 states that had expanded Medicaid compared to those that did not.  Hospitals in expansion states also had better financial margins.[5]

Corroborating this finding, a 2017 study found that uncompensated care burdens fell sharply in expansion states between 2013 and 2015, from 3.9 percent to 2.3 percent of operating costs—a 41 percent reduction.  Estimated savings across all hospitals in Medicaid expansion states totaled $6.2 billion.[6]

For every additional patient that Medicaid covers, hospitals have less uncompensated care. 

  • This provides relief to patients with private market coverage as these costs are no longer shifted to them.
  • The community benefits when their local hospital is more fiscally stable; this means the hospital is more likely to be there when people need care.
  • This is particularly important for rural communities where higher proportions of patients are uninsured, and a higher percentage are expected to benefit from Medicaid expansion.[7]

The table below lists Maine hospitals that had negative operating margins according to 2016 data (their costs were greater than the total payments they received for services during that time)[8].  Uncompensated care contributes enormously to that shortfall.  This table provides an estimate of the amount of Medicaid expansion dollars that would be available to hospitals with Medicaid expansion.

Hospital

Medicaid Expansion Revenue available in 2021 with Medicaid Expansion[9]

Central Maine Medical Center

$12,731,666

Mercy Hospital

$8,622,352

Pen Bay Medical Center

$4,558,457

Southern Maine Health Care

$9,451,760

Aroostook Medical Center

$4,172,923

York Hospital

$5,871,977

Franklin Memorial Hospital

$1,898,863

Maine Coast Memorial Hospital

$2,835,635

Bridgton Hospital

$1,666,856

Calais Regional Hospital

$1,666,856

Charles A. Dean Memorial Hospital

$1,310,414

Inland Hospital

$2,560,276

Houlton Regional Hospital

$1,647,604

Mayo Regional Hospital

$1,727,199

Millinocket Regional Hospital

$938,621

Penobscot Valley Hospital

$862,851

Rumford Community Hospital

$1,364,641

[1] https://www.kff.org/other/state-indicator/nonelderly-0-64/?dataView=1&cu...

[2] Some hospitals provide charity care to those with higher income levels, in some cases up to 200% of the federal poverty level. 

[3] Maine Health Data Organization.  https://mhdo.maine.gov/hospital_financials.htm

[4] http://themha.org/Media/Press-Release/MHA-Board-votes-to-support-Medicaid-Expansion-Refe

[5] Blavin, F. 2016. Association Between the 2014 Medicaid Expansion and US Hospital Finances. JAMA 316(14). http://jamanetwork.com/journals/jama/fullarticle/2565750

[6] Dranove, D., Garthwaite, C, Ody, C.  The Impact of the ACA’s Medicaid Expansion on Hospital’s Uncompensated Care Burden and the Potential Effects of Repeal. The Commonwealth Fund. Mehttp://www.commonwealthfund.org/publications/issue-briefs/2017/may/aca-m...

[7] Kilbreth, Beth; The Real Impact of Medicaid Expansion in Maine. 2017; http://www.mejp.org/sites/default/files/Medicaid‐Expansion‐The‐Real‐Impact‐Kilbreth‐Sep2017.pdf

[8] https://mhdo.maine.gov/_pdf/Report%201_2016.pdf

[9] Estimates of Medicaid expansion revenue prepared by the Maine Center for Economic Policy, October 2017

 
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