State aid for potential hospital losses uncertain

By Bobby Harrison/NEMS Daily Journal

JACKSON – Gov. Phil Bryant’s spokesman and key legislators say it’s too early to say for certain whether the state would provide funds to hospitals that would experience financial shortfalls if Mississippi doesn’t expand its Medicaid program.
A report last week by internationally known credit rating agency Moody’s said the credit rating of states that do not expand Medicaid as part of federal law could be negatively affected, as well as the credit rating of the hospitals in those states.
The reason, Moody’s surmised, is that those states will have to decide whether to use state money to offset the loss of federal money they would have gotten by expanding Medicaid or whether to let hospitals suffer financially.
State leaders have not given definitive answers when asked if they would support providing additional state funds.
When asked if the governor would consider providing additional state money to hospitals, spokesman Mick Bullock said, “I am not going to comment on speculation, which is what your question is.”
Nicole Johnson, a Moody’s senior vice president, said in a news release, “States that opt out of Medicaid expansion will have to choose whether to compensate for the shortfalls with their own funds or leave hospitals to absorb the costs, which will increase rating pressure on the hospitals.
“States that choose to fund uncompensated care costs themselves (instead of participating in the federal Medicaid expansion) could face budgetary strain,” Johnson added.
The Legislature’s two chairs of the Appropriations committees indicated it is unlikely Mississippi will use state money to offset the loss of federal funds.
“That would be a difficult option at this time,” said House Appropriations Chairman Herb Frierson, R-Poplarville. “If we were in flush economic times, it might not be a bad option.”
Senate Appropriations Chairman Buck Clarke, R-Holandale, said, “We’re not at the point where we are even talking about it. The bond rating does concern me because it is an indication of how well the state does its business.”
Frierson said, “You never say never. I don’t know. There are so many unknowns out that right now about the expansion.”
Clarke said if additional state money were directed to hospitals to offset the loss of federal funds it would be part of a larger overhaul of the state Medicaid program.
The Mississippi Hospital Association has estimated the state’s hospitals would lose more than $3 billion over 10 yeas because of changes in federal law. A large part of that loss would be because of the Affordable Care Act that over time reduces the “disproportionate share hospital” payments used to partially offset the loss to hospitals for treating people unable to pay.
The rationale for reducing the payments is that the Medicaid expansion would mean hospitals would provide less uncompensated care.
But Bryant, who unsuccessfully sued to block the federal law, and other Mississippi legislative leaders oppose the state participating in the expansion that would cover people earning up to 138 percent of the federal poverty level, or about $15,000 annually for an individual.
Bryant said the state cannot afford the expansion and that he fears the federal government might renege on its promises on what it will pay.
The federal government would pay 100 percent of the expansion costs for the first three years, starting in 2014. After that, the federal share will stair step down to 90 percent in 2020 where the state-federal matching rate is supposed to remain.
Rep. Steve Holland, D-Plantersville, a staunch proponent of the Medicaid expansion, questioned the wisdom of refusing federal money and instead using state funds to pay for the same health care expense.
“That would not be wise to use state funds instead,” Holland said. “We have to get our heads out of the sand on Medicaid expansion.”
Currently, about 640,000 people – primarily poor pregnant women, poor children, certain groups of the elderly and the disabled – are covered by Medicaid in Mississippi. For the people currently in the program in Mississippi, the federal government pays about 74 percent of the costs.
Studies conclude the expansion would add about 300,000 people to Medicaid, mostly people working in low-wage jobs.
bobby.harrison@journalinc.com