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Fact Sheet: The Cost of Sabotage To State & Local Taxpayers

By May 24, 2018No Comments

REPUBLICAN HEALTH CARE SABOTAGE MEANS FEWER PEOPLE HAVE INSURANCE, WHICH DRIVE UP HOSPITALS’ UNCOMPENSATED CARE COSTS AND COSTS TAXPAYERS MONEY

For Each Person Who Becomes Uninsured, Hospitals’ Uncompensated Care Costs Increase By $900. One study, published by the National Bureau of Economic Research, estimated that “each newly uninsured person leads to nearly $900 in uncompensated care costs.” [National Bureau of Economic Research, June 2015]

Coverage Losses Threaten To Reverse Large Drops In Uncompensated Care That Resulted from The Affordable Care Act’s Historic Coverage Gains. “Between 2013 and 2015, as the nationwide uninsured rate fell from 14.5 percent to 9.4 percent (a 35 percent decline), uncompensated care costs as a share of hospital operating expenses fell by 30 percent.” [Center on Budget and Policy Priorities, 5/23/18; see state-by-state estimates in appendix]

Republican Sabotage Will Increase Uninsured By 3 Million In 2019. The nonpartisan Congressional Budget Office now projects that the number of uninsured people will increase by 3 million between 2018 and 2019. Per CBO, this is “mainly because the penalty associated with the individual mandate will be eliminated and premiums in the nongroup market will be higher.” [Congressional Budget Office, 5/23/18]

Using The National Bureau of Economic Research’s Estimate That Uncompensated Care Costs $900 Per Person, Sabotage Could Cost Hospitals $2.7 Billion In 2019. Using the National Bureau of Economic Research’s estimate that each person who loses insurance increases hospitals’ uncompensated care costs by $900, this coverage loss could result in $2.7 billion more uncompensated costs  in 2019. [Congressional Budget Office, 5/23/18]

In Michigan, Uncompensated Care Costs Fell After The State Expanded Medicaid. A University of Michigan study found that the average hospital’s uncompensated care expenses fell nearly 50 percent, from $7.21 million to $3.77 million, after the state expanded Medicaid. More than 90 percent of hospitals in the study saw a decline in uncompensated costs between 2013 and 2015. [University of Michigan, 12/31/16]

In Tennessee, The Reverse Held True; Medicaid Cuts Drove Up Uncompensated Care Costs. In 2005, approximately 4 percent of Tennessee’s non-elderly adult population lost public insurance coverage. Following these cuts, the uncompensated care each hospital provided increased. [National Bureau of Economic Research, June 2015]

When Hospitals Have Uncompensated Costs, Taxpayers Bear The Burden. “Hospitals do get help with the unpaid bills – from taxpayers. The majority of hospitals are non-profits and are exempt from federal, state and local taxes if they provide a community benefit, such as charitable care. Hospitals also receive federal funding to offset some of the costs of treating the poor.” [USA Today, 7/3/17]

BY PUSHING MEDICAID RESTRICTIONS, PRESIDENT TRUMP AND CONGRESSIONAL REPUBLICANS ARE HURTING STATE & LOCAL TAXPAYERS

19 States Still Refuse To Expand Medicaid, Denying Communities Financial Support. “National, multi-state, and single state studies show that states expanding Medicaid under the ACA have realized budget savings, revenue gains, and overall economic growth. A 2016 study found that growth in state Medicaid spending in expansion states has been lower relative to non-expansion states.” [Kaiser Family Foundation, 3/28/18]

Studies Show That Expanding Medicaid Can Save States Money. “Multiple studies suggest that Medicaid expansion can result in state savings by offsetting state costs in other areas, including state costs related to behavioral health services, crime and the criminal justice system, and Supplemental Security Income program costs. For example, a study on Montana revealed that as Medicaid’s role in financing substance use disorder (SUD) services has grown under the state’s decision to expand Medicaid, federal Medicaid dollars have replaced federal block grant and state dollars previously used to fund services for uninsured Montanans with SUD.” [Kaiser Family Foundation, 3/28/18]

Expanding Medicaid Helps States Save In Uncompensated Care Costs. The Center for Healthcare Research & Transformation at the University of Michigan found that in states that expanded Medicaid, uncompensated care costs decreased from $15.7 billion in 2013 to $9.6 billion in 2015, while costs in non-expansion states remained relatively stable. [Center for Healthcare Research & Transformation, July 2017]

The Trump Administration Is Pushing States To Adopt Medicaid Work Requirements, Which Cost States More Money Than They Save. In April, President Trump signed an executive order directing federal agencies to encourage states to require their residents to work in order to have health insurance through Medicaid. In addition to being widely understood as ways to reduce Medicaid enrollment, establishing such requirements is expected to actually cost taxpayers money:

Estimates From Nine States Show That Implementing Work Requirement Programs Includes Tremendous Costs. “As estimates from nine states implementing or considering such proposals show, projected costs are typically in the tens of millions of dollars per year, with even higher start-up costs for some states. Kentucky plans to spend $186 million in fiscal year 2018 and another $187 million in 2019 to implement its waiver. And a work requirement considered by Pennsylvania’s legislature would have cost $600 million and require 300 additional staff to administer, according to a state official. Effectively, these proposals divert some state and federal dollars from providing health care to creating new bureaucracy.” [Center on Budget and Policy Priorities, 5/23/18]

In Kentucky, Work Requirements Mean The State Will Lose Out On Federal Funding While Saving Taxpayers Relatively Little. “There’s an even more direct way that work requirements don’t make economic sense. According to Kentucky’s own calculations, the Medicaid waiver will reduce the flow of federal funds to the state by nearly $700 million annually by 2021, while reducing state spending, and taxes paid by state residents, much more modestly… By 2021, when the waiver effects are fully in place, Kentucky will forgo about $680 million annually in federal funds. Kentucky residents will benefit very little from lower taxes as a result of this reduced federal spending — 99 percent of any federal savings will accrue to residents of other states (since Kentuckians contribute just 1 percent of all federal income taxes).” [Commonwealth Fund, 4/9/18]

Restricting People’s Access To Medicaid Will Likely Increase Hospitals’ Uncompensated Care Costs. “Coverage losses from eligibility restrictions will increase uncompensated care costs…Because new eligibility restrictions are projected to reverse a meaningful share of the coverage gains under the ACA’s Medicaid expansion, they will likely reverse a significant share of uncompensated care savings as well.” [Center on Budget and Policy Priorities, 5/23/18]