Study: Medicaid Work Requirements Will Weaken Hospital Finances

Mar 26, 2019

  If Kentucky implements new Medicaid rules this summer, hospitals could see their revenue drop by 20 percent.  That’s according to an analysis of hospital finances in states that have approved or pending Medicaid waiver applications. 

According to estimates, about 95,000 Kentuckians over five years could lose health coverage if the state implements Medicaid rules that would require most recipients to work, attend school, or volunteer as a condition of receiving benefits. 

A study commissioned by the liberal-leaning Commonwealth Fund found that hospitals will incur more costs for uncompensated care for patients losing Medicaid coverage.  Randy Haught of Dobson DaVanzo and Associates was the study's lead author.

“They may use less care, but they’ll still be using hospital services," Haught told WKU Public Radio. "The hospitals will still be required to treat those patients and they’ll still be incurring a lot of the costs of caring for those patients, but they won’t be getting the revenue.”

The study found that the impact varies across states.  Haught says Kentucky hospitals stand to lose the most in revenue because of how the Medicaid overhaul is designed.

“They’re looking at subjecting both expansion population and traditional Medicaid enrollees to work requirements and they’re going all the way to 65 where most states only went up to age 50," Haught explained.

Haught says rural hospitals in Kentucky are already losing about four cents on every dollar, and the work requirements could increase that deficit to seven cents. 

Kentucky expanded Medicaid eligibility under former Governor Steve Beshear which added about 400,000 recipients.  Governor Matt Bevin says the expansion is financially unsustainable without enrollees bearing some responsibility for their coverage.

A group of Kentucky Medicaid recipients is suing to block the overhaul from taking effect.  A federal judge heard arguments in the case earlier this month and a ruling is expected as soon as this week. Kentucky’s work requirements are slated to take effect on July 1.