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Elderly patient sitting beside empty hospital bed.
President Obama's budget proposes to postpone, for one year, $500 million in Medicaid cuts that were supposed to be implemented in 2014 as a result of Medicaid expansion under the Affordable Care Act. Sarah Kliff explains.
A bit of history is helpful here. For decades now, Medicaid has sent states billions of dollars in something called Disproportionate Share, or DSH, payments. These funds, which totaled $11.3 billion in 2011, go to the hospitals that provide a higher level of uncompensated care and are meant to help offset the bills of the uninsured.

At first, the health law appeared to make DSH payments unnecessary. When the Affordable Care Act expanded Medicaid to 17 million Americans, it would significantly reduce the burden of unpaid bills on health-care providers.

However, with the Supreme Court ruling that states could opt out of the expansion, all of those 17 million won't be getting Medicaid and those DSH payments are still going to be needed for the hospitals. The hospitals that provide that care have been fighting to get their governors and legislatures to take the Medicaid expansion, and failing that lobbying the White House to reverse the cuts. So that money is still, unfortunately, going to be necessary.

Restoring that money is important, but it's also a problem in actually getting as many of those 17 million people onto Medicaid. If that money is restored, it means less incentive for states who are holding out on expansion. It's not as much money as the expansion would bring them, but it means governors won't be on the hook for figuring out how to help struggling hospitals.

Originally posted to Joan McCarter on Wed Apr 10, 2013 at 02:53 PM PDT.

Also republished by Daily Kos.

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Comment Preferences

  •  Tip Jar (28+ / 0-)

    "There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning." —Warren Buffett

    by Joan McCarter on Wed Apr 10, 2013 at 02:53:36 PM PDT

  •  Obviously trying to distract from other cuts! (7+ / 0-)


    I ♥ President Barack Obama.

    by ericlewis0 on Wed Apr 10, 2013 at 03:02:40 PM PDT

  •  That car you spoke about Mr. President, did it go (6+ / 0-)
    Recommended by:
    whaddaya, Stude Dude, marina, jasan, PinHole, stevej

    back off the road for you and back to where Dubya left it? Pitiful.

    Many times I’ve returned. Never was I the same in any of my guises. I feel inside, my times before, with no memories of each journey. My soul’s shadows haunt all the paths it has traveled.

    by Wendys Wink on Wed Apr 10, 2013 at 03:14:01 PM PDT

  •  The hospitals are not taxed for taking care of the (7+ / 0-)

    needy, why do they need more?  If the governors of those states insist on being dicks, then let them explain that to the hospitals.  To me, this just weakens Obamacare even further.  The law states they must be treated at the emergency room, that may be the place to go.

    •  And for some of those states, worse than that.. (3+ / 0-)

      Here in Kansas, if our new system goes into effect, medical costs WILL be taxed.

      However, the problem is as you put it.. President Obama is in a situation where Republican governors are rejecting the money and now they will boo-hoo about the disasters to their residents and blame the Health Care plan.  

      This is a good way to root for - and cause - failure in order to gain political points, and it's sickening.

      Gandhi's Seven Sins: Wealth without work; Pleasure without conscience; Knowledge without character; Commerce without morality; Science without humanity; Worship without sacrifice; Politics without principle

      by Chris Reeves on Wed Apr 10, 2013 at 04:28:33 PM PDT

      [ Parent ]

  •  One other problem is Medicaid rates (4+ / 0-)

    It's the rare hospital who breaks even on Medicaid payment rates. Nearly all hospitals lose money on Medicaid patients. Obviously not as much as they lose on uninsured patients, but they still take a loss. That loss is covered by third party insured patients.

    "let's talk about that"

    by VClib on Wed Apr 10, 2013 at 04:13:46 PM PDT

    •  Except that the rates billed by the hospitals (5+ / 0-)
      Recommended by:
      Rick B, xxdr zombiexx, zaka1, Mr Robert, anana

      to both medicare and medicaid have no relation to actual costs.  They are highly inflated, and the coding is abused to raise billing.  One example Boot to stabilize a broke leg: Medicare billed 317.00 dollars, medicate pays over 100.00 dollars.  The Same boot on sale on the internet for $59.95. The whole medical system is irretrievably broken and fraudulent.  As are the largest portion of our public institutions.  See the Elizabeth Warren diaries as examples.

      Patriotism may be the last refuge of scoundrels, but religion is assuredly the first.

      by StrayCat on Thu Apr 11, 2013 at 04:08:05 PM PDT

      [ Parent ]

      •  That may well be the case. (0+ / 0-)

        I have no idea if it's true or not.

        I do know, as a person who was an elder care worker for nineteen years, that doctors did not want new MediCare patients some twenty years ago. They just were not making enough money to afford the additional staff person needed to help with the billing. And if the payments are further cut to the providers, seniors will find it harder than ever to find someone to be their GP.

        Offer your heart some Joy every day of your life, and spread it along to others.

        by Truedelphi on Thu Apr 11, 2013 at 04:57:46 PM PDT

        [ Parent ]

      •  There are several reasons. Here's a big one. (0+ / 0-)

        The health care providers provide services and then ask the insurance companies to pay for it. The insurance companies pay the charges plus 25% or more for overhead (insurance executives don't work cheap) and pass those costs on in health insurance premium.

        Notice that no hearth care professionals are involved in the money trail.. Health insurers save money by either refusing to pay or by choosing providers in their own network.

        Show me the incentive to provide treatment at lower cost. Every incentive in this is to charge more.

        The federal CMS is setting up Accountable Care Organizations across the nation that have to goal of providing improved care at lower cost. One of the first things is to make hospitals responsible for the care of the patient even after they go to nursing homes. If they go back into  the Hospital in less than 30 or 60 days (I forget which) then the hospital cannot again bill Medicare. It's the same  hospitalization. So they have to make sure the nursing home has adequate and timely information regarding how to care for the patient. This has sharply lowered readmission rates where practiced and improved the patient care ad satisfaction.

        America can get better health care outcomes at sharply less cost. The media is going to be interviewing the parasites who go into medicine to get rich rather than to provide care. Overall, though, there is a lot of waste that can be wrung out of the system without refusing treatment or providing shoddy treatment to patients.

        A really big source of funds is the extra surcharge that every level of treatment has to build into their prices because they can't expect to be repaid for the uninsured. This price increase does not exist in Canada or in Great Britain. It's massive but invisible. No accountant in his or her right mind  is going to allow the price charged to be less than cost of treatment and a surcharge on paying customers to cover those who do not pay! No one can calculate what portion of costs that is, but it builds up through hospitals, physicians, laboratories, and pharmacies.

        Knock out these non-treatment related expenses and Medicaid rates look pretty good -  except to the parasites who want to get rich catering to people who fear the system will leave them high and dry.  

        Note that both of these reasons are much too complicated for the political media to bother trying to explain. All technical and no shock and fear to attract advertisements.

        The US Supreme Court has by its actions and rhetoric has ceased to be legitimate. Whiskey Tango Foxtrot - over

        by Rick B on Thu Apr 11, 2013 at 05:30:54 PM PDT

        [ Parent ]

      •  StrayCat - that may be true (0+ / 0-)

        But there are very few physicians or hospitals who want to take Medicaid patients. My personal physician won't even take new Medicare patients, he loses money on those. I don't think he has ever taken a Medicaid patent and stopped taking new Medicare patients ten years ago. As we expand access through larger enrollment of Medicaid patients who is going to provide the care?

        "let's talk about that"

        by VClib on Thu Apr 11, 2013 at 07:07:04 PM PDT

        [ Parent ]

  •  Good..... ? (2+ / 0-)
    Recommended by:
    StrayCat, Rick B

    I think?  One more step toward universal health care - or am I WAY too optimistic?

    I see you drivin' 'round town with the girl I love / And I'm like / Please proceed, Governor. - Dave Itzkoff

    by Jensequitur on Wed Apr 10, 2013 at 08:01:19 PM PDT

    •  Not without blood in the streets. And it will be (1+ / 0-)
      Recommended by:

      ours, not the crooks.

      Patriotism may be the last refuge of scoundrels, but religion is assuredly the first.

      by StrayCat on Thu Apr 11, 2013 at 04:09:04 PM PDT

      [ Parent ]

    •  Yes, you are unfortunately...Obamacare will have (3+ / 0-)
      Recommended by:
      Helpless, zaka1, Sychotic1

      to fail completely AND then we will have to go through another year of debate and filibuster and elections and would take years, if ever.

    •  Sadly, you are way too optimistic (I'm afraid). (0+ / 0-)

      Perfect illustration of "why" we need Medicare-For-All.

      This is only one of several so-called 'unintended  consequences' that we're in for, as a result of the ACA.

      I believe that there will be some fairly 'serious blowback' to the ACA next year.  Especially if many major coporations choose to quit providing group health insurance to their employees, like Mr. Mollie's company threated last open enrollment period [for 2014].

      They did make good on one threat.  We went from having three plans to choose from, to only one plan.

      And yes, the coverage is not as comprehensive as the two plans that were dropped, offered.

      Which is another reason that it's incomprehensible that the Administration would even consider implementing several cuts to Medicare [like the new 'Medigap premium surcharge,' higher actual Medicare premiums for some so-called 'well-off' seniors, implementation of a co-pay for some home healthcare visits, which are now at no additional cost to seniors, etc.] and the Chained CPI, at this time.
      Maybe they want the Senate to turn over, so they can push policies that are even further to the right, LOL!


      "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


      by musiccitymollie on Thu Apr 11, 2013 at 04:32:11 PM PDT

      [ Parent ]

      •  a lot of people (2+ / 0-)
        Recommended by:
        RBinDLH, Mr Robert

        are already convinced it's going to be very expensive, because their insurers have raised their premiums in anticipation of ACA going into effect.

        That's something that should have been foreseen: it's an obvious thing for insurance companies to do to maintain their profit margins.

        (Is it time for the pitchforks and torches yet?)

        by PJEvans on Thu Apr 11, 2013 at 06:13:23 PM PDT

        [ Parent ]

        •  You're right. Actually, I inadvertently misstated (0+ / 0-)

          what Mr. M's company did.

          They reduced their health insurance plan offerings for 2013 from three, to one plan, which offers less extensive coverage.

          And they told us (but no final word yet) that depending upon the regulations issued by HHS in regard to the ACA, they would possibly stop offering health insurance beginning in 2014 when the exchanges are up and running.

          Hope this does not happen extensively.  Wouldn't wish this on anybody else.  ;-)


          "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


          by musiccitymollie on Thu Apr 11, 2013 at 07:18:57 PM PDT

          [ Parent ]

  •  Wouldn't it be far better to have (3+ / 0-)
    Recommended by:
    Catkin, Helpless, Rick B

    people covered by Medicaid than to have them end up in the ER and then cover that via money to the hospital?

  •  #fixitlater (4+ / 0-)

    Not sure how much more fixing I can take...

    "Small Businesses Don't Build Levees" - Melissa Harris Perry

    by justmy2 on Thu Apr 11, 2013 at 04:11:22 PM PDT

  •  One reader at WAPO suggests: (1+ / 0-)
    Recommended by:
    ... instead of just postponing the cuts one year, target just those states that are not choosing to expand Medicaid.

    Otherwise, they are just putting off the problem for a year and then will face it again next year.

    Denial is a drug.

    by Pluto on Thu Apr 11, 2013 at 04:14:05 PM PDT

  •  House Teabagger dilemma (1+ / 0-)
    Recommended by:

    "Restoring that money is important, but it's also a problem in actually getting as many of those 17 million people onto Medicaid. If that money is restored, it means less incentive for states who are holding out on expansion."

    OK. Do the idiot tea baggers in the House vote more money to the states for the DSH payments and get accused of increasing federal outlays, or do they support Rick Perry and his ilk in their temper tantrum refusal to expand Medicaid and throw the hospital owners under the bus?

    The US Supreme Court has by its actions and rhetoric has ceased to be legitimate. Whiskey Tango Foxtrot - over

    by Rick B on Thu Apr 11, 2013 at 04:14:11 PM PDT

    •  Texas has the highest number of uninsured (2+ / 0-)
      Recommended by:
      Pluto, jedennis

      people in the country. It might be better if Perry did throw the hospital owners under the bus if other states could be seen to flourish because they accepted the DSH payments.

      48forEastAfrica - Donate to Oxfam> "It is better to light a candle than to curse the darkness." Edna St.V. Millay

      by slouching on Thu Apr 11, 2013 at 04:24:22 PM PDT

      [ Parent ]

      •  Neither choice will look good for the tea baggers (1+ / 0-)
        Recommended by:

        and both are simple enough and negative enough for Politico reporters to blame the conservatives for.

        As a Texan myself I am really hoping that Perry's idiocy is going to get the Hospital owners and executives to support the Democrats.

        The US Supreme Court has by its actions and rhetoric has ceased to be legitimate. Whiskey Tango Foxtrot - over

        by Rick B on Thu Apr 11, 2013 at 05:38:31 PM PDT

        [ Parent ]

  •  I think it's important to keep in mind (3+ / 0-)
    Recommended by:
    shrike, xxdr zombiexx, peptabysmal

    ...that the first priority is to let the American people experience national health care for 30 months.

    After that, let the Republicans try to take it away.

    The GOP knows full well that after Americans get a taste of it -- they will never ever give it up. That is why they are insanely desperate to stop it NOW.

    Denial is a drug.

    by Pluto on Thu Apr 11, 2013 at 04:19:13 PM PDT

  •  If Obama would stand firm, (4+ / 0-)
    Recommended by:
    jedennis, poli sigh, Sychotic1, TexasTom

    hospital lobbyists might just get some more states to expand Medicaid.

  •  struggling hospitals? (0+ / 0-)

    WTF hospitals for profit are not struggling they are huge corporations that make a ton of profit off medicare/medicade and everyone who has no choice but to pay there outrageous bills to keep them profitable. With ACA they will get even higher profits.Actually hospitals for profit played a large part in killing the PO.

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