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The Patient Protection and Affordable Care Act, also known as Obamacare, plays a dangerous game with incentives.  The 2,700 page legislation keeps digging itself into a deeper hole.    

One incentive focuses on Medicaid expansion, where states have the option to accept fully funded federal dollars for the next three years to increase health care coverage for over 21 million Americans.  Assuming states accept this offer, Medicaid Disproportionate Share Hospital (DSH) payments would no longer be needed.  

MedicaidDisproportionate Share Hospital payments are distributed to hospitals that serve a significantly disproportionate number of low-income patients and tend to have a low percentage of private payer revenue.  In other words, these hospitals care for a higher percentage of low-income patients unable to afford private health insurance.   

According to the Kaiser Family Foundation, North Carolina ranks 13th highest in the nation regarding the amount of DSH hospital payments it receives via Medicaid.  In FY 2011, NC received over $295 million in DSH payments.  To access the state list of qualified hospitals, click here.

On The National Forefront 

Today, reality tells a different story.  Because roughly half of all states appear unwilling to go forward with Medicaid expansion, DSH cuts will not go into effect until 2015.  The White House insists the motive is "To better align DSH payments with expected levels of uncompensated care."     

Keep in mind that the Patient Protection and Affordable Care Act originally projected to begin cuts in DSH payments by $360 million starting in 2014.  By decade’s end, the cuts were supposed to amount to a deficit reduction of $3.6 billion. 

The Obama Administration recently released its $3.77 trillion budget.  Within this large amount, it is critical to analyze the minuscule $360 million increase in Medicaid spending.  This 0.01 percent of the budget clearly signifies that Obamacare will not succeed in reducing costs as promised

Easing the Tension:

This past March, The Charlotte Business Journal reported, "North Carolina’s decision not to expand Medicaid as part of federal health-care reform will cost the state’s hospitals millions of dollars annually."  It went on to state that some hospitals "will face difficult decisions as costs associated with uncompensated care and bad debt continue to rise."

Meanwhile, CaroMont Health in Gastonia claims, "Roughly $8 million in Medicaid payments will be lost by the decision against expanding access to the program".     

Despite the fact that DSH allotments are not equal  to the large amount of funding North Carolina would receive via Medicaid expansion, the pushback will ease some tensions.  Not only will North Carolina feel less pressure to accept Medicaid Expansion, but hospitals can relax as well.  So long as enough states keep saying "no" to expansion money, the Obama Administration will most likely continue to further postpone DSH cuts. 

Medicaid Expansion: What is Seen and Not Seen

Regardless, Medicaid expansion just won’t work.  Currently, 1.8 million North Carolinians receive Medicaid benefits.  If North Carolina opted for expansion, approximately 500,000 additional citizens would gain health care coverage.  This is what is seen. 

Many problems arise from broadening an entitlement program that always runs on a budget shortfall of millions of dollars.  Although 76% of physicians in the state accept new Medicaid patients through the Community Care of North Carolina (CCNC) medical-home model, an increase in enrollment may cause more strain on accessible care, especially with the projected "doc shortage" by 2020.  This is what is not seen.   

A Little Competition Won’t Hurt

Competition brings out the best in us.  We can laud Governor McCrory for rejecting expansion and instead initiating a Medicaid reform framework that encourages competitive contracting amongst multiple Comprehensive Care Entities (CCEs).  These provider networks will compete with each other offering a variation of Medicaid benefits for patients in need of both physical and behavioral health care.  Hopefully, this reform will reduce costs long term while emphasizing patient choice.