Medicaid math is tough when factoring loss of hospital funds

Mississippi currently receives approximately $210 million in annual DSH payments for uncompensated care. Graves puts that at $219 per patient per day. He says the state would see a 15 percent cut in DSH payments starting in 2014, regardless if Medicaid is expanded or not.

In real dollars, that would be $31.5 million annually that Mississippi hospitals would lose to pay for uncompensated care.

With that number in mind, let’s look at how much it will cost to expand Medicaid. Using the report published by the Institutions of Higher Learning, Medicaid expansion is expected to cost the state $64.6 million by 2020, an average of $9.2 million annually. By 2025, Medicaid expansion would cost the state $95.8 million, an average of $7.9 million annually.

The math here is pretty easy. We can pay $31.5 million to cover the loss to hospitals, or we can pay between $8 million to $10 million per year for Medicaid expansion.

In fairness, I should point out two things:

• If Mississippi expands Medicaid, the NEJM study says that DSH payments to the state will be cut by 30 percent, which is $63 million annually. There is no guarantee that Medicaid expansion will cover that loss, but most models agree that it likely would.

• Higher cost estimates for Medicaid expansion exist, most notably the Milliman study conducted on behalf of the Department of Medicaid. I didn’t use the Milliman study because they consider additional costs in addition to Medicaid payments. If we consider those costs, we should consider the impact of an additional $1 billion in federal money in Mississippi by 2020. For comparison’s sake, I looked at just federal dollars lost and gained in direct health care spending.

Sam Hall
Clarion Ledger
2/6/13