Tuesday, April 12, 2016
But as any leader in the nonprofit world will tell you, having a mission that goes beyond an operating margin does not absolve an organization from the need to be solvent. We wouldn’t be of much use to our patients if we didn’t make ends meet.
Unfortunately for our hospitals here on the coast and for Maine’s other hospitals, we live in a world of shrinking resources, and that makes meeting our nonprofit mission more difficult every day.
At both our hospitals and in our physician practices, we provide millions of dollars of free care every year to people who lack insurance. We don’t do this passively. When we can, we help those patients who qualify to sign up for health insurance on the federal Exchange created under the Affordable Care Act.
But there is a large group of very low-income patients —many of whom have significant health care needs such as mental illness, diabetes and drug use disorder — whose incomes are too low to qualify for subsidies on the Exchange. Unfortunately, in Maine they also don’t qualify for federal Medicaid coverage, known as MaineCare.
This is stressing our healthcare system, and it wasn’t supposed to be that way. When the Affordable Care Act passed in 2010, its financing model was based on key factors:
• Hospitals would contribute financially through reductions in Medicare and in payments the federal government made to help with charitable care. In turn, hospitals would realize increased revenues as uninsured patients gained coverage through the Exchange and expanded Medicaid.
By 2021, the parent organization that oversees our two hospitals will have contributed more than $26 million to fund expanded coverage under the Affordable Care Act. Those reductions in federal payments to the hospital were to be offset by $12 million in new insurance revenue, of which $4 million was supposed to be derived from Medicaid expansion. But so far, the state of Maine has refused to expand Medicaid here.
As a result, we are providing more free care than ever — $ 5.8 million in last year alone.
These costs are weighing heavily on our bottom line, as we seek to break even and meet our mission. This scenario is not sustainable for our region or for Maine’s economy.
In Maine, hospitals are being forced to pay twice: Once to the federal government through Medicare payment reductions and once as we absorb the increased cost of free care provided to those who might otherwise qualify for Medicaid. We keep hearing how much Medicaid expansion would cost Maine, but it is time to talk about how much the failure to expand Medicaid is costing Maine’s non-profit hospitals and the communities they serve.
In the current Maine Legislative Session there is a group of lawmakers, led by Republican Sen. Tom Saviello of Wilton, who understand that turning down hundreds of millions of dollars in federal funding each year to eventually save tens of millions of dollars in a state budget that tops $3 billion annually is a huge mistake.
Senator Saviello’s bill, LD 633, is a thoughtful approach that would expand Medicaid to Maine’s neediest while also providing coverage for the working poor through private insurance coverage and by requiring those individuals to be accountable for covering a portion of their costs.
The recently released fiscal note on that bill shows this legislation would cost the state $93.1 million over three years — an amount equal to about 1 percent of state expenditures over that period. In that time, the federal government would pump nearly $1.2 billion into the state. That money would ripple through the state’s economy in the form of increased employment in the healthcare sector as well as savings on private insurance premiums.
A number of responsible legislators have opposed similar bills in the past out of fears that Washington could change the funding equation. However, in Medicaid’s 50-year existence, the federal government has reduced Medicaid funding only once, temporarily, in the early 1980s. Since that time, federal Medicaid funding has been increased nationwide in both 2003-2004 and 2007-2009 during recessions.
Maine is fortunate to have its not-for-profit hospitals. They have served as providers of last resort for more than a century, assuring that no one is turned away when they are sick and in need of care. But this system is being squeezed, and our communities are paying the price as mistrust of Washington trumps simple math and economic fact in Augusta.
Op-ed first appeared in the Free Press