JOPLIN, Mo. — For Missouri hospitals, the federal health care law has caused quite a conundrum.
Adding to it is that for the second year in a row, the Missouri Legislature has opted not to take money made available by the federal government to expand its Medicaid rolls, and that problem is only augmented by federal cuts to other programs that fund health care.
“How much pain does a lawmaker’s local community have to endure before they decide there’s something they can do?” asked Mike Peters, vice president of government affairs for Mercy. “There may have to be more pain before there’s a solution.”
Mercy, which operates hospitals in Missouri and six other states, announced earlier this month that it would be laying off 200 to 300 people due, in part, to lack of Medicaid expansion. The company would not say where the cuts will take place. More than 1,500 of the system’s 40,000 employees work in Joplin.
“Mercy is managing the impact of market changes, including reimbursement reductions from government and commercial payers, lack of Medicaid expansion in most of the states we serve and declining inpatient utilization,” the company said in a statement announcing the cuts.
The 2012 ruling by the U.S. Supreme Court upholding the constitutionality of the provision in the health care law requiring Americans to either purchase health insurance or pay a fine also included something of a poison pill for President Barack Obama’s health care plan: It said that the federal government could not force states to expand their Medicaid programs.
In order for the health care law to work, it is practically essential for Medicaid to be expanded. That’s because cuts to Medicare’s Disproportionate Share Hospital program, which helps reimburse hospitals for uncompensated care, were supposed to be made up for by Medicaid expansion. Advocates for Medicaid expansion — like the Missouri Chamber of Commerce and Industry or the Missouri Hospitals Association — have dubbed this the “Obamacare cuts” and are demanding lawmakers find a cure.
“Medicaid was a critical part of funding the bill,” Peters said.
Between 2013 and 2019, Mercy expects about $100 million in federal cuts, on top of more the $13.8 million sequestered by the bill to avert the 2012 “fiscal cliff.” Last year, Freeman Health System’s Joplin campuses received nearly $10 million in Medicare DSH payments. This year, the system expects a reduction of about $500,000, and when the federal health care law goes into full effect (including the cuts that have been delayed to DSH), they expect those payments to be completely eliminated.
“That’s definitely a threat for hospitals,” said Paula Baker, CEO of Freeman Health Systems. She said she is not forecasting any layoffs similar to Mercy’s yet. “I think as we experience cuts, we have to step back and evaluate,” she said. “But at this point, I’m not seeing layoffs on our horizon.”
Joplin is one of the most conservative cities in the state. Its delegation to the General Assembly is broadly opposed to expanding Medicaid.
Baker said she has sensed a shift in thought among local legislators.
“I think they understand the impact it has on the patients in the areas they serve and the impact on hospitals. There are smaller hospitals that are going to have a difficult time surviving with the types of cuts that are projected,” she said. “I feel that they are open to looking at ways to make this work as we go into the next session.”
At one point this year, a Republican plan did begin to float around the Capitol. Two Kansas City-area Republicans, Sen. Ryan Silvey and Rep. Noel Torpey, developed a plan that Governing magazine described as the “most conservative plan” yet to expand Medicaid. Their plan coupled long-sought Republican reforms to entitlement programs like food stamps with efforts to expand Medicaid and leverage federal dollars to help those making between $23,550 and $33,000 purchase plans in the exchange.
In his budget for 2015, Democratic Gov. Jay Nixon called for the use $1.6 billion in federal funds to expand Medicaid coverage. According to his projections, that would save the state $86 million by shifting some of the state’s Medicaid bill up to the federal government. “We make money as far as our budget,” he said during an interview Friday at The Joplin Globe.
Nixon said the Mercy job cuts are a prime example of the economic case he’s been making for Medicaid expansion all along.
“I tried to lay out that bad things could happen. Since they haven’t moved forward, bad things are. The 200 Mercy employees, when they go home and don’t have a paycheck, that’s noticeable,” he said. “As things get a little worse, the pressure builds.”
Their plan did not get a vote, but Nixon said the fact that it was even introduced on the Senate floor was cause for optimism.
“The problem you have is a political problem, not a policy problem,” Nixon said. “I think that elections mark a point, and you move forward from there.”