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Not expanding Medicaid could cost Missouri more than 9,000 jobs, $1.9 billion in reduced capital investment or $1.1 billion in cost shift to the insured, according to a new analysis from the Missouri Hospital Association. The gloomy forecast is based on cuts included in the Affordable Care Act and Budget Control Act of 2011, which when combined, reduce hospital reimbursement by $4 billion between 2013 and 2019.
“The Affordable Care Act included cuts to hospital payments but offset some of those cuts through increased coverage,” said Herb B. Kuhn, MHA president and CEO. “Without the new revenue from expanded coverage, the numbers don’t add up. That’s bad news for the currently insured and bad news for Missouri’s economy.”
A recent study from the University of Missouri found that Medicaid expansion would create more than 22,000 sustainable jobs. However, not expanding Medicaid would leave the ACA’s cuts in place and require hospitals to make costly decisions about staff, services and infrastructure.
To illustrate the consequences of $4 billion in cuts, the analysis projected the effect of reductions in both workforce and capital investments between 2012 and 2021. The analysis found that cuts of this magnitude would reduce hospital employment by 5,011 through 2021. In addition, because hospital jobs support additional jobs in communities throughout the state, the analysis projected a total job loss using standard economic multipliers. The total job loss, accounting for the ripple effect of hospital community job cuts, would equal 9,019 jobs statewide.
Missouri’s hospitals invest approximately $1 billion annually in their physical plants and properties. Without the offsetting revenue provided by Medicaid expansion, a $4 billion cut to hospital payments could reduce hospital capital expenditures by $1.9 billion through 2021.
“In 2011, Missouri hospitals provided more than $1.1 billion in uncompensated care statewide — a record level,” Kuhn said. “Without expansion and in light of the cuts, this level of care is unsustainable. The cuts will significantly impair hospitals’ ability to invest in the staff, services and facilities necessary to deliver the level of care Missourians expect.”
In addition to the cost to Missouri’s economy through losses in jobs and capital investment, Missouri businesses could bear an increased share of the cost of the uninsured. The cost shift, also known as the “hidden health care tax,” would likely increase in the absence of Medicaid expansion. These costs are borne by businesses and individuals and the $4 billion in cuts could increase the costs by $1.1 billion through 2021.
“This new analysis paints a stark contrast to the earlier work by the University of Missouri on the economic benefits of Medicaid expansion,” Kuhn said. “It paints a picture of a Missouri that pays more in federal taxes and gets less. And, that’s not a direction we can afford to go as a state.”
The Missouri Hospital Association is a not-for-profit association in Jefferson City that represents 154 Missouri hospitals. In addition to representation and advocacy on behalf of its membership, the association offers continuing education programs on current health care topics and seeks to educate the public about health care issues.