The CDC selected Walmart and Sam’s Club to help administer COVID-19 vaccines in communities across the United States.
Why it’s important: With 5,000+ pharmacy locations, the company can administer the vaccine in hard-to-reach parts of the country.
The CDC selected Walmart and Sam’s Club to help administer COVID-19 vaccines in communities across the United States.
Why it’s important: With 5,000+ pharmacy locations, the company can administer the vaccine in hard-to-reach parts of the country.
LifePoint’s Castleview Hospital in Price, Utah.
Private equity firm, flush with cash, sees ‘upside’ and more acquisitions.
Like hospital chains across the U.S., LifePoint Health tapped federal relief money to blunt the cost of the Covid-19 pandemic. It was a potent lifeline, a total of $1.5 billion.
But LifePoint is unusual in one respect, its owner: private equity firm Apollo Global Management, led by billionaire Leon Black.
LifePoint was certainly eligible for the money. But the extent of the federal assistance could contribute to concern in Washington over whether private equity-backed hospitals should have been. In July, the U.S. House passed a bill that would require health-care companies to disclose any private equity backing when seeking short-term loans from the federal Medicare program.
The reason for lawmakers’ concern: Private equity firms have ample access to cash. As recently as June, the Apollo fund that owns LifePoint had more than $2 billion to support its investments. Apollo, which manages $414 billion, recently told investors in an internal document that LifePoint was in such a strong market position that it was planning to make acquisitions of less fortunate hospitals.
The relief flowing to LifePoint illustrates a drawback of a government program designed to send out money quickly to every hospital, regardless of financial circumstances, according to Gerard Anderson, a health policy professor at Johns Hopkins University.
“This particular hospital system does not appear to need the money,” he said.
LifePoint and Apollo say they absolutely did. In their view, taxpayer money helped cover the soaring cost of treating Covid-19 patients and lost revenue because of the loss of fees from lucrative elective procedures. The assistance enabled the chain to retain all of its workers and provide essential service to its communities, they said.
“No health-care provider, including LifePoint, is immune to this, regardless of their ownership,” said LifePoint spokesperson Michelle Augusty.
Said an Apollo spokesperson: “Apollo is proud of LifePoint’s response to the Covid pandemic as they continue to provide vital care for both Covid and non-Covid patients.’’
LifePoint owns a far-flung collection of small-town hospitals, from Western Plains Medical Complex in Dodge City, Kansas, to Bourbon Community Hospital in Paris, Kentucky. For years, private equity has been pushing into every corner of American health care. Many medical professionals worry that these Wall Street-style investors will inevitably put profits before patients – something private equity denies.
LifePoint’s Willamette Valley Medical Center in McMinnville, Oregon.
In April, LifePoint Chief Executive Officer David Dill and other hospital officials met with President Donald Trump. Dill urged Trump to keep helping hospitals, noting that LifePoint’s medical centers tend to be in the middle of the country, “smaller communities, which I know are communities very important to you,’’ according to a transcript of the meeting.
“Rural hospitals are a very important part of the infrastructure in this country and also treating the uninsured and the Medicaid population as well,’’ Dill said.
Trump pointed out that the hospitals didn’t appear to be in the “hot spots.” Dill acknowledged they were handling only “a couple hundred Covid patients.” (The company said it has now cared for almost 20,000.)
In April, the month the government started distributing assistance, LifePoint borrowed $680 million in the capital markets. It also had access to $900 million in cash and an $800 million credit line, according to Moody’s Investors Service.
By Apollo’s own account, LifePoint was doing just fine when the pandemic struck. In fact, it was thriving – and looking to expand. As of March 31, shortly before LifePoint got taxpayer dollars, Apollo’s investors were on track to double their money, internal documents show. On paper, they were sitting on a gain of more than $800 million.
“Independent hospital systems have greater difficulty weathering prolonged periods of financial stress,’’ Apollo wrote to its investors in May. “A consolidation strategy will provide meaningful upside for Apollo funds’ investment.’’
Apollo said the crisis represented an opportunity: “The coronavirus pandemic will serve as a catalyst for additional M&A opportunities given the attractive scale and overall position of the LifePoint platform.”
Apollo built its rural hospital empire through the acquisition of three regional hospital chains in 2015, 2016 and 2018. Apollo Investment Fund VIII LP owns 76% of LifePoint, which is based in Brentwood, Tennessee.
Even though many individual rural hospitals are struggling, Apollo says it can operate them more efficiently by merging them together. LifePoint now owns 88 hospitals in 29 states. It had almost $9 billion of annual revenue last year.
Apollo says that on its watch, the chain has improved its infrastructure and technology, recruited care providers and built new centers.
And for rural hospitals, Apollo argues, bigger is better.
“We continue to believe that rural hospitals can benefit from being part of a larger well-run system that enables access to greater resources and infrastructure for improved patient care,” the Apollo spokesperson said.
CMS accelerated payments to hospitals and other healthcare providers at the beginning of the COVID-19 pandemic to help temporarily relieve financial strain. It’s time to begin repaying the Medicare loans but that isn’t possible for some rural hospitals, according to NPR.
CMS expanded the Accelerated and Advance Payment Program in late March to help offset financial damage caused by the COVID-19 pandemic. CMS announced April 26 that it was reevaluating pending and new applications for advance payments due to the availability of funds under the Coronavirus Aid, Relief and Economic Security Act. As of May, CMS had paid out $100 billion in advance payments, the bulk of which went to hospitals.
Hospitals and other healthcare providers are required to start repaying the Medicare loans this month. Most hospitals will have one year from the date the first loan payment was made to repay the loans, according to Kaiser Family Foundation.
Ozarks Community Hospital, 25-bed critical access hospital in Gravette, Ark., is one of the hospitals that applied for and accepted the Medicare loans. The hospital also received grants made available under the CARES Act, which do not have to be repaid.
CEO Paul Taylor said Ozarks Community Hospital’s revenue is still constrained, and he doesn’t know how it will pay back its $8 million Medicare loan. Payments for new Medicare claims will be offset to repay the loans, but losing those payments could force the hospital to close, Mr. Taylor told NPR.
“If I get no relief and they take the money … we won’t still be open,” he said.
Ozarks Community Hospital is one of more than 850 critical access hospitals in rural areas that received Medicare loans, according to NPR. Given the shaky financial footing of many rural hospitals before the pandemic, the strain of having Medicare payments withheld could be enough to force others to shut down.
Before the pandemic, more than 600 rural hospitals across the U.S. were vulnerable to closure, according to an estimate from iVantage Health Analytics, a firm that compiles a hospital strength index based on data about financial stability, patients and quality indicators.
If the financial pressures tied to the pandemic force any of those hospitals to shut down, they’ll join the list of 131 rural hospitals that have closed over the past decade, according to the Cecil G. Sheps Center for Health Services Research.
The indictment, filed in the Middle District of Florida and unsealed Monday, alleges the 10 defendants, using management companies they owned, would take over rural hospitals often struggling financially. They would then bill commercial payers for millions of dollars for pricey urine analysis drug tests and blood tests through the rural hospitals, though the tests were normally conducted at outside labs, and launder the money to hide their trail and distribute proceeds.
The rural hospitals had negotiated rates with commercial insurers for higher reimbursement for tests than if they’d been run at an outside labs, so the facilities were used as a shell for fraudulent billing for often medically unnecessary tests, the indictment alleges.
The defendants, aged 34 to 60, would get urine and other samples by paying kickbacks to recruiters and healthcare providers, like sober homes and substance abuse treatment centers.
Screening urine tests, to determine the presence or absence of a substance in a patient’s system, is generally inexpensive and simple — it can be done at a substance abuse facility, a doctor’s office or a lab. But confirmatory tests, to identify concentration of a drug, are more precise and sensitive and have to be done at a sophisticated lab.
As such they’re more expensive and are typically reimbursed at higher rates than screening urine tests. None of the rural hospitals had the capacity to conduct confirmatory tests, or blood tests, on a large scale, but frequently billed in-network insurers, including CVS Health-owned Aetna, Florida Blue and Blue Cross Blue Shield of Georgia, for the service from 2015 to 2018, the indictment says.
Rural hospitals are facing unprecedented financial stress amid the pandemic, but have been fighting to keep their doors open for years against shrinking reimbursement and lowering patient volume. That can give bad actors an opportunity to come in and assume control.
One of the defendants, Jorge Perez, 60, owns a Miami-based hospital operator called Empower, which has seen many of its facilities fail after insurers refused to pay for suspect billing. Half of rural hospital bankruptcies last year were affiliated with Empower, which controlled 18 hospitals across eight states at the height of the operation. Over the past two years, 12 of the hospitals have declared bankruptcy. Eight have closed, leaving their rural communities without healthcare and a source of jobs.
“Schemes that exploit rural hospitals are particularly egregious as they can undermine access to care in underserved communities,” Thomas South, a deputy assistant inspector general in the Office of Personnel Management Office of Inspector General, said in a statement.
Nearly one in five Americans live in rural areas and depend on their local hospital for care. Over the past 10 years, 130 of those hospitals have closed.
Thirty-three states have seen at least one rural hospital shut down since 2010, and the closures are heavily clustered in states that have not expanded Medicaid under the ACA, according to the Cecil G. Sheps Center for Health Services Research.
Twenty-one rural hospitals in Texas have closed since 2010, the most of any state. Tennessee has the second-most closures, with 13 rural hospitals shutting down in the past decade. In third place is Oklahoma with eight closures.
Listed below are the 130 rural hospitals that have closed since Jan. 1, 2010, as tracked by the Sheps Center. For the purposes of its analysis, the Sheps Center defined a hospital closure as the cessation in the provision of inpatient services.
“We follow the convention of the Office of Inspector General that a closed hospital is ‘a facility that stopped providing general, short-term, acute inpatient care,'” reads a statement on the Sheps Center’s website. “We did not consider a hospital closed if it: merged with, or was sold to, another hospital but the physical plant continued to provide inpatient acute care, converted to critical access status, or both closed and reopened during the same calendar year and at the same physical location.”
As of June 8, all the facilities listed below had stopped providing inpatient care. However, some of them still offered other services, including outpatient care, emergency care, urgent care or primary care.
SouthWest Alabama Medical Center (Thomasville)
Randolph Medical Center (Roanoke)
Chilton Medical Center (Clanton)
Florence Memorial Hospital
Elba General Hospital
Georgiana Medical Center
Sitka Community Hospital
Cochise Regional Hospital (Douglas)
Hualapai Mountain Medical Center (Kingman)
Florence Community Healthcare
De Queen Medical Center
Kingsburg Medical Center
Corcoran District Hospital
Adventist Health Feather River (Paradise)
Coalinga Regional Medical Center
Regional General Hospital (Williston)
Shands Live Oak Regional Medical Center
Shands Starke Regional Medical Center
Hart County Hospital (Harwell)
Charlton Memorial Hospital (Folkston)
Calhoun Memorial Hospital (Arlington)
Stewart-Webster Hospital (Richland)
Lower Oconee Community Hospital (Glenwood)
North Georgia Medical Center (Ellijay)
St. Mary’s Hospital (Streator)
Fayette Regional Health System
Central Kansas Medical Center (Great Bend)
Mercy Hospital Independence
Mercy Hospital Fort Scott
Horton Community Hospital
Oswego Community Hospital
Sumner Community Hospital (Wellington)
Nicholas County Hospital (Carlisle)
Parkway Regional Hospital (Fulton)
New Horizons Medical Center (Owenton)
Westlake Regional Hospital (Columbia)
Doctor’s Hospital at Deer Creek (Leesville)
St. Andrews Hospital (Boothbay Harbor)
Southern Maine Health Care-Sanford Medical Center
Parkview Adventist Medical Center (Brunswick)
Edward W. McCready Memorial Hospital (Crisfield)
North Adams Regional Hospital
Cheboygan Memorial Hospital
Lakeside Medical Center
Albany Area Hospital
Albert Lea-Mayo Clinic Health System
Mayo Clinic Health System-Springfield
Patient’s Choice Medical of Humphreys County (Belzoni)
Pioneer Community Hospital of Newton
Merit Health Natchez-Community Campus
Quitman County Hospital (Marks)
Sac-Osage Hospital (Osceola)
Parkland Health Center-Weber Road (Farmington)
Southeast Health Center of Reynolds County (Ellington)
Southeast Health Center of Ripley County (Doniphan)
Twin Rivers Regional Medical Center (Kennett)
I-70 Community Hospital (Sweet Springs)
Pinnacle Regional Hospital (Boonville)
Tilden Community Hospital
Nye Regional Medical Center (Tonopah)
Lake Shore Health Care Center
Moses-Ludington Hospital (Ticonderoga)
Blowing Rock Hospital
Vidant Pungo Hospital (Belhaven)
Novant Health Franklin Medical Center (Louisburg)
Yadkin Valley Community Hospital (Yadkinville)
Our Community Hospital (Scotland Neck)
Sandhills Regional Medical Center (Hamlet)
Davie Medical Center-Mocksville
Physicians Choice Hospital-Fremont
Doctors Hospital of Nelsonville
Muskogee Community Hospital
Epic Medical Center (Eufaula)
Memorial Hospital & Physician Group (Frederick)
Latimer County General Hospital (Wilburton)
Pauls Valley General Hospital
Sayre Community Hospital
Haskell County Community Hospital (Stigler)
Mercy Hospital El Reno
Saint Catherine Medical Center Fountain Springs (Ashland)
Mid-Valley Hospital (Peckville)
Ellwood City Medical Center
UPMC Susquehanna Sunbury
Bamberg County Memorial Hospital
Marlboro Park Hospital (Bennettsville)
Southern Palmetto Hospital (Barnwell)
Fairfield Memorial Hospital (Winnsboro)
Holy Infant Hospital (Hoven)
Riverview Regional Medical Center South (Carthage)
Starr Regional Medical Center-Etowah
Haywood Park Community Hospital (Brownsville)
Gibson General Hospital (Trenton)
Humboldt General Hospital
United Regional Medical Center (Manchester)
Parkridge West Hospital (Jasper)
Tennova Healthcare-McNairy Regional (Selmer)
Copper Basin Medical Center (Copperhill)
McKenzie Regional Hospital
Jamestown Regional Medical Center
Takoma Regional Hospital (Greeneville)
Decatur County General Hospital (Parsons)
Wise Regional Health System-Bridgeport
Shelby Regional Medical Center
Renaissance Hospital Terrell
East Texas Medical Center-Mount Vernon
East Texas Medical Center-Clarksville
East Texas Medical Center-Gilmer
Good Shepherd Medical Center (Linden)
Lake Whitney Medical Center (Whitney)
Hunt Regional Community Hospital of Commerce
Gulf Coast Medical Center (Wharton)
Nix Community General Hospital (Dilley)
Weimar Medical Center
Care Regional Medical Center (Aransas Pass)
East Texas Medical Center-Trinity
Little River Healthcare Cameron Hospital
Little River Healthcare Rockdale Hospital
Stamford Memorial Hospital
Texas General-Van Zandt Regional Medical Center (Grand Saline)
Hamlin Memorial Hospital
Central Hospital of Bowie
Lee Regional Medical Center (Pennington Gap)
Pioneer Community Hospital of Patrick County (Stuart)
Mountain View Regional Hospital (Norton)
Williamson Memorial Hospital
Fairmont Regional Medical Center
Franciscan Skemp Medical Center (Arcadia)
At least 13 hospitals in Oklahoma have closed or experienced added financial distress under the management of private companies. Some companies charged hefty management fees, promising to infuse millions of dollars that never materialized.
Revenues soared at some rural hospitals after management companies introduced laboratory services programs, but those gains quickly vanished when insurers accused them of gaming reimbursement rates and halted payments. Some companies charged hefty management fees, promising to infuse millions of dollars but never investing. In other cases, companies simply didn’t have the hospital management experience they trumpeted.
Click on link above for examples of rural hospitals that pinned their hopes on private management companies that left them deeper in debt. They are based on interviews, public records and financial information from the Centers for Medicare and Medicaid Services and the American Hospital Directory.
The unprecedented financial distress mega health systems are under amid the ongoing pandemic is all too familiar to rural hospitals.
These systems are often smaller, employing fewer specialists and less medical technology, thus limiting the variety of services they can provide and profit on. They remain the closest point of care for millions of Americans, yet face rising closures.
The good news is that most rural hospitals are nonprofit, the designation that fared best in Health Affairs’ six-year study. More than 80% of the 1,004 private, rural hospitals analyzed in the study were nonprofit, while 17% were for-profit.
But researchers found Medicaid expansion played a key role in rural hospitals’ financial viability during the study period, with closures occurring more often in the South than in other regions.
Thirty-seven states have expanded Medicaid under the ACA, but 14 have not, and a majority of them are concentrated in the southern U.S., according to data from the Kaiser Family Foundation.
One of those states is Oklahoma, which on Monday withdrew its planned July 1 Medicaid expansion, citing a lack of funding.
Another factor researchers found positively associated with overall margins and financial viability was charge markups, or the charged amount for a service relative to the Medicare allowable cost. Hospitals with low-charge markups had median overall margins of 1.8%, while those with high-charge markups had margins at 3.5%.
The same is true for occupancy rates. In 2017, rural hospitals with low occupancy rates had median overall profit margins of 0.1% Those with high occupancy rates had margins of 4.7%.
That presents a unique challenge for rural hospitals. Reimbursements from public and private payers do not compensate for fixed costs associated with providing standby capacity, which is essential in rural communities, where few hospitals serve large geographic areas.
Since 1997, CMS has been granting rural hospitals — particularly those with 25 or fewer acute care inpatient beds and located more than 35 miles from another hospital — critical access status, reimbursing them at cost for treating Medicare patients.
In the Health Affairs study, critical access hospitals accounted for 21% of the rural hospital bed capacity, with the remaining 79% of bed capacity provided by noncritical access hospitals.
Small hospitals going through bankruptcy are suing the Small Business Administration, arguing it is unlawful for the federal government to deny them loans under the Paycheck Protection Program, Axios’ Bob Herman reports.
Why it matters: Allowing bankrupt hospitals access to PPP loans could keep their doors open, and could force the federal government to reverse its stance and allow other bankrupt firms to get PPP loans.
Driving the news: Faith Community Health System, a small rural hospital in Texas that filed for bankruptcy in February, sued the SBA Thursday.
The big picture: Courts are starting to take hospitals’ side.
The bottom line: Rural hospitals have been in dire straits for years, and for those that are on the precipice of or are going through bankruptcy, they may be eligible for this bailout funding despite SBA exclusions.
Attorney General Bill Barr had urged the White House to soften its attack on the law during the pandemic.
President Donald Trump on Wednesday said his administration will urge the Supreme Court to overturn Obamacare, maintaining its all-out legal assault on the health care law amid a pandemic that will drive millions of more Americans to depend on its coverage.
The administration appears to be doubling down on its legal strategy, even after Attorney General William Barr this week warned top Trump officials about the political ramifications of undermining the health care safety net during the coronavirus emergency.
Democrats two years ago took back the House of Representatives and statehouses across the country by promising to defend Obamacare, in particular its insurance protections that prevent sick people from being denied coverage or charged more because of a health condition. The issue may prove to be even more salient in November amid the Covid-19 outbreak that health experts believe will persist through the fall.
The Justice Department had a Wednesday deadline to change its position in a case brought by Republican-led states, but Trump told reporters Wednesday afternoon his administration would stand firm. DOJ declined to comment.
“Obamacare is a disaster, but we’ve made it barely acceptable,” Trump said.
The Supreme Court later this fall will hear a lawsuit from the GOP-led states that argue the Affordable Care Act was rendered invalid after Congress eliminated its tax penalty for not having health insurance. A coalition of Democratic state attorneys general and the Democratic-led House of Representatives are defending the law in court.
The Trump administration had previously shifted its legal position in this case, but appears to have decided against doing so again. DOJ originally argued the courts should throw out just Obamacare’s preexisting condition protections, before last year urging that the entire law be struck down.
The Supreme Court is expected to hear the case during its next term starting in October, but it hasn’t scheduled arguments yet. A decision is unlikely before the Nov. 3 election. The court has previously upheld Obamacare in two major challenges that threatened the law’s survival.
About 20 million people have been covered by Obamacare, and the law is expected to provide a major safety net during the economic freefall brought on by the coronavirus. Millions more are expected to join the Medicaid rolls, especially in states that joined Obamacare’s expansion to poor adults. Others who lost workplace health insurance can sign up on the law’s health insurance marketplaces, though the Trump administration isn’t doing much to advertise coverage options.
House Democrats in a filing to the Supreme Court on Wednesday said the pandemic showcased why justices should preserve the law.
“Although Congress may not have enacted the ACA with the specific purpose of combatting a pandemic, the nation’s current public-health emergency has made it impossible to deny that broad access to affordable health care is not just a life-or death matter for millions of Americans, but an indispensable precondition to the social intercourse on which our security, welfare, and liberty ultimately depend,” their brief read.
Obamacare has grown more popular since the GOP’s failed repeal bid during Trump’s first year in office, though the law is still broadly disliked by Republicans. Many Democrats are eager to again run on their defense of Obamacare this fall. That includes presumptive presidential nominee Joe Biden, who has advocated for building on the health care law rather than pursuing a comprehensive progressive overhaul like “Medicare for All.”
Top Trump officials have long been split on the legal strategy in the Obamacare lawsuit. Barr and Alex Azar, the Health and Human Services secretary, both opposed a broader attack on the law, but White House officials have been more supportive, seeing it as a chance to fulfill Trump’s pledge to repeal Obamacare. Barr, in a Monday meeting with Vice President Mike Pence and other White House officials, made an eleventh-hour plea for the administration to soften its legal stance ahead of the Supreme Court’s briefing deadline.
Three states have cut back state spending on the program since the pandemic hit, and more are warning of painful cuts to benefits and services.
States facing sudden drops in tax revenue amid the pandemic are announcing deep cuts to their Medicaid programs just as millions of newly jobless Americans are surging onto the rolls.
And state officials are worried that they’ll have to slash benefits for patients and payments to health providers in the safety net insurance program for the poor unless they get more federal aid.
State Medicaid programs in the previous economic crisis cut everything from dental services to podiatry care — and reduced payments to hospitals and doctors in order to balance out spending on other needs like roads, schools and prisons. Medicaid officials warn the gutting could be far worse this time, because program enrollment has swelled in recent years largely because of Obamacare’s expansion.
The looming crisis facing Medicaid programs “is going to be the ’09 recession on steroids,” said Matt Salo, head of the National Association of Medicaid Directors. “It’s going to hit hard, and it’s going to hit fast.”
Medicaid programs, among the largest budget items in most states, provide health insurance to roughly 70 million poor adults, children, the disabled and pregnant women. The federal government on average pays roughly 60 percent of program costs, with poorer states receiving a higher share. States have the latitude to adjust benefits, payments to health care providers and eligibility requirements with oversight by the federal government.
Now, governors are turning to Congress for help as it weighs a new package to rescue state budgets battered by the pandemic. They’re asking lawmakers to provide a bigger boost to Medicaid payments and provide hundreds of billions of dollars in aid to shore up state budgets.
Medicaid naturally faces heightened demand as economic conditions worsen. But that leaves states facing more need at the same time that they have less money.
“The cruel nature of the economic downturn is that at a time when you need a social safety net is also the time when government revenues shrink,” Ohio Gov. Mike DeWine, a Republican, said Tuesday as he announced $210 million in cuts to his state’s Medicaid program in the next two months.
The vast majority of a $229 million spending cut made by Colorado Democratic Gov. Jared Polis last week came from Medicaid, though new federal funds will forestall an immediate reduction in benefits or payments to health providers. State legislative committee staff have warned Medicaid enrollment there could spike by 500,000 by the end of the year.
In Georgia, where Medicaid enrollment is projected to rise by as much as 567,000, Republican Gov. Brian Kemp and legislative leaders have instructed every state agency to prepare for 14 percent reductions across the board.
House Democrats are pushing to deliver a $1 trillion-plus package in aid to state and local governments and to support safety net programs, which could alleviate pressure on states to make deep cuts to health care during a pandemic. Some Republican lawmakers have questioned the need for more aid, after Congress has shoveled out trillions of dollars in rescue funding.
Congress already gave states a temporary 6 percent increase in the federal portion of Medicaid spending in an earlier coronavirus package. That prompted Alaska Gov. Mike Dunleavy, a Republican, to cut state Medicaid spending $31 million last month, saying the temporary federal boost would make up the difference.
State officials largely agreed the increase was helpful but said it likely will be washed out by an expected enrollment surge. The nation’s governors say Congress — in addition to providing at least $500 billion in direct support to states — must double the Medicaid funding boost to 12 percent as it did in the previous recession. At least one Republican senator facing a tough reelection fight, Cory Gardner of Colorado, said his state sorely needs extra Medicaid funding to avoid “harmful budget cuts.”
Anywhere from 11 million to 23 million more people could sign up for Medicaid over the next several months. The demand will be even greater in roughly three-quarters of states that expanded Medicaid enrollment to poor adults under the Affordable Care Act.
The portion of state budgets devoted to Medicaid spending has grown quickly since the previous recession, making it a riper target for cuts. Medicaid spending on average accounted for 15.7 percent of state budgets in fiscal 2009, a number that jumped to 19.7 percent in fiscal 2019.
Medicaid enrollment data in some states often lags, making it difficult to determine how much national sign-ups have climbed since jobless claims began surging two months ago. Some states have begun to report notable surges, however, and larger increases are expected in the coming months.
Arizona in the past two months saw 78,000 people enroll in Medicaid and the Children’s Health Insurance Program, which receives more generous funding from the federal government. Virginia has seen a 20 percent increase in enrollment applications since mid-March.
In New Mexico, where 42 percent of the population was already enrolled in Medicaid, sign-ups in the first two weeks of April surged by about 10,000 more people than were expected before the pandemic.
New Mexico’s top Medicaid official said the budget is a significant concern for a state heavily reliant on oil and natural gas. She worries a prolonged economic downturn could force the state to roll back pay increases to Medicaid providers enacted last year, and another planned pay raise for next year is almost certainly off the table.
States that accepted the temporary Medicaid payment increase from Congress are barred from cutting back enrollment while they’re receiving the enhanced funds. That leaves states with the option of cutting benefits or provider payments to find Medicaid savings, which could ignite fierce brawls in state capitals.
Michigan state Rep. Mary Whiteford, the Republican chairwoman of a health care appropriations panel, said the state’s Medicaid enrollment could increase from 2.4 million to 2.8 million by the end of the year.
“We are just planning for major cuts moving forward,” Whiteford said.
Before the pandemic, states had socked away $72 billion in rainy day funds — an all-time high, said Brian Sigritz of the National Association of State Budget Officers. But that figure was easily dwarfed by the $150 billion Congress provided to state and local governments in an earlier package, and it’s far short of what states are demanding.
“Now, we’re looking at greater declines than what we saw during the Great Recession and increased spending,” Sigritz said. “If there aren’t more federal funds, states will have to look at cutting funding for key services: public safety, education, health care. That’s where the money is.”