A Philosopher's Blog

Medicaid Expansion & Hospital Closures

Posted in Business, Law, Medicine/Health by Michael LaBossiere on January 10, 2018

One aspect of Obamacare was the expansion of Medicaid in states that agreed to accept this expansion. Some states, such as my adopted state of Florida, declined the expansion. This provided researchers with an opportunity to study the effects of accepting or rejecting the expansion.

One study, conducted by researchers at the University of Colorado Anschutz Medical Campus, found that hospitals in states that expanded Medicaid were six times less likely to close than hospitals in states that declined the expansion. Hospitals in rural areas, which tend to rely more heavily on Medicaid and generally have less income relative to urban hospitals, were the hardest hit.

These results are hardly surprising. Hospitals are required by the 1986 Emergency Medial Treatment and Labor Act(EMTALA) “to ensure public access to emergency services regardless of ability to pay.” As such, unlike other businesses, they cannot turn away people who cannot pay for the services they provide. While Medicaid payments to hospitals are notoriously low, some payment is better than no payment. Because of this, hospitals in states that expanded Medicaid are less likely to need to provide unpaid services and this makes it more likely that they can remain profitable and stay open.

It is, of course, reasonable to consider alternative explanations. After all, mere correlation is not causation and it would be fallacious post hoc reasoning (to infer that because A happened after B, B must have caused A) to simply conclude that Medicaid is the cause. The states that expanded Medicaid might differ in other ways from states that did not—for example, they might have more robust economies or larger percentages of privately ensured patients. That said, the study does seem to support the connection between Medicaid and hospitals remaining open.

One moral and practical concern about hospital closings is that people who need care will be less able to receive it. While it would be hyperbole to claim that hospital closings would leave people in the area with no care, it does reduce their access to care. This is especially of concern in rural areas that already have few hospitals. While people can, of course, travel to get medical care, increased travel times would reduce the likelihood that people will seek care and would also impact outcomes. For example, rapid treatment is critical for stroke victims. Even if patients still have access to a local hospital, hospital closures will increase the time patients need to wait for treatment and this can have a negative impact on medical outcomes.

While health care does not operate within a free market of informed consumers and competitive prices, the closing of hospitals can result in increased costs for medical care. After all, the scarcer a commodity is, the more people tend to charge for it. Since medical care is already extremely expensive, an increase in costs would be even more of a burden on patients, especially those that are not affluent.

Because of the negative impact of not expanding Medicaid, states that have not expanded it should do so. This will decrease hospital closures and thus have a generally positive impact. From a moral standpoint, this would be the right thing to do—assuming that the state has an obligation to the well-being of its citizens.

One obvious counter to this view is to argue against such an obligation. This position is often taken by conservatives who favor limited government and oppose entitlements. There is also the obvious market-based argument here (although medical care is clearly not operating as a free market). The gist of this argument is that medical services are a business and that if a business cannot stay open on its own, then the state has no obligation to intervene. As such, Medicaid should not be expanded to address this problem: if the hospitals cannot stay open on their own, then the market should close them.

The easy and obvious reply to this is that, as noted above, the law requires hospitals to provide medical services even when patients cannot pay. By imposing this restriction, the state has taken a strong role in the market. Since the state imposes this requirement on hospitals, it seems reasonable that the state should take steps to offset this burden—in this case, by expanding Medicaid.

Alternatively, EMTALA could be repealed and hospitals could operate like other businesses in terms of being able to refuse services for those who cannot pay. In this case, there would not be a need to expand Medicaid to assist hospitals in remaining open—they would not lose money providing services to those who cannot pay. But, there would be a high cost in terms of sickness and death among those unable to afford medical care. There is also the possibility that even without the burden of EMTALA hospitals would still be more likely to close without a Medicaid expansion. After all, while hospitals would not be losing money on patients who cannot pay, they would also not have the financial benefit of the Medicaid expansion. As such, their closure rate would presumably be higher than hospitals in states that have expanded Medicaid.

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3 Responses

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  1. dh said, on January 11, 2018 at 3:30 pm

    It seems as though this entire argument is a “Yes/No” regarding Medicaid expansion, while not considering any other possibilities. Someone else on this forum, and I forget who, described it thus:

    “We must do something”
    “This is something”
    “Therefore, we must do this”

    Perhaps you have noticed that I am extremely cynical when it comes to the actions of the federal government. While the tenets of “Critical Thinking” would have me always look beyond the surface for other reasons or motivations, I think that when it comes to the federal government I might take it to a somewhat higher level. Nonetheless, and not surprisingly, I think this is warranted – and I think I’m covering myself adequately by acknowledging it in the context of my arguments.

    There is a substantial amount of research that indicates that Medicaid recipients get substandard care, and that the proliferation and expansion of Medicaid can result in a sort of “denial of service” to others. This is of great concern to me – and I have seen it in person. It works like this:

    As you state, Medicare and Medicaid are notorious for low payments. As a result, fewer physicians are taking on new patients who are on Medicare, simply because they cannot afford it. Those who do accept Medicaid and Medicare find that they have to increase their volume of patients for any given day. This results in rushed visits, missed or inaccurate diagnoses, and long lines for others. There is some validity to the argument that Medicaid patients are, on the whole, less healthy than their privately insured counterparts for reasons having to do with income demographics and education level, not with Medicaid – but this argument I think makes both of our cases – yours in regard to “coincidence/causality”, and mine for looking at all causes and all options.

    I think that “keeping hospitals open” is a reasonable goal to have, and you are correct – it’s better to have some kind of facility open than none – but if that means that the care is rushed and/or substandard, the benefit is greatly diminished. Unfortunately, the way that political debate goes, it seems as though the arguments are simply black and white – red vs blue, rich vs poor, funding vs non-funding – without a deep dive into any of the nuance or alternatives.

    I don’t think that Obama or the Democrats really considered alternatives to this plan – it was rushed, it was pressed, it was handled with a “You’re either with us or against us” attitude, and was ultimately pressed into existence more as being vital to Obama’s political viability and ultimate legacy than for the benefit of the population. Even today, the one single talking point that is repeated over and over is the number of uninsured who now have coverage – an important number, of course, but no one asks “what kind of coverage?” or “what might some alternatives have been?” or “How does this impact the rest of the country?”

    There is also the way in which individual states were “offered the opportunity” to accept the Medicaid expansion. There was much debate in the Supreme Court as to the legality of this approach, dealing primarily with the semantics of “Compulsion vs Coercion” – but the ancillary rewards offered to the states that accepted the expansion, along with the restrictions or “punishments” promised to those who did not, point to a strong ulterior motive on the part of the federal government that seems beyond the superficial goal of “We just want to help”. Here’s a great scholarly publication discussing the semantics argued by the Supreme Court:

    https://pdfs.semanticscholar.org/0af7/fd4ef9e8e7da4b8d937c9a1c4944caf2c130.pdf

    After reading that article, I was reminded of the scene in “It’s a Wonderful Life”, where Potter offers Bailey a job for the unheard of sum of $20,000 per year to “manage his affairs”. All he had to do was join forces – which, when jumping to the Federal/State analogy, diminishes the power of the states and the people in them, and puts the governors in a dicey collusive relationship with Washington that undermines the very Constitutional principles on which this country was founded.

    So speaking of alternatives (and in keeping with the “identity politics” motivations of different parties, it would appear that there are now block-grants being offered to states that did not accept the expansion. In an article published by “New York” magazine, I think the authors get it right:

    “You’d like to think something as important as the repeal and replacement of the Affordable Care Act would, if nothing else, revolve around matters of principle and policy. But as the Senate barrels toward a possible vote on the Graham-Cassidy “block grant” legislation, the debate, such as it is, resembles an old-fashioned federal funding “formula fight” between the several states. And the key differentiator is very simple: States that accepted the ACA’s Medicaid expansion are going to lose to one extent or another, and states that Just Said No will be (relatively speaking) rewarded.”

    Hmmm. “…you’d think something [this important] would revolve around matters of principle and policy…”

    I wonder who they are talking about? Not me. I think it would revolve around what’s in it for the politicians and the government, and those old concepts of money, power, and influence.

    Medicaid is not the only answer – in fact, it’s an unsustainable band-aid that will do more damage than good in the long run. Worse, by accepting it as the only answer and reducing the argument to “Medicaid or Not”, we distract ourselves from finding a better, more workable, more effective, and more sustainable solution.

  2. TJB said, on January 11, 2018 at 11:56 pm

    And yet people are moving to Florida in droves. Go figure.


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