The Uncompensated Care Scam

by Charles Katebi

Medicaid's allies are gearing up their expansion drive for the 2016 budget session. As usual, they're trying to convince Wyomingites that they will save big if government spends more of their money. We've heard this story before.

Governor Mead, Wyoming's Hospital Association and the Department of Health all claim that Wyoming's uninsured population is freeriding on our healthcare system by using services without paying for them. If only we expanded Medicaid and enrolled them in a government insurance program, taxpayers and hospitals alike will save money. According to Saint John's Medical Center in Jackson, WY:

"If the Legislature accepts the Governor's plan and expands Medicaid, hospitals across Wyoming will gain many patients who can pay more of their costs. Our hospitals will thus be in stronger position to keep serving their communities."

Wyoming's elected leaders should reject these false promises.

Expanding Medicaid to stop uncompensated care is wrong for three reasons:

1) Medicaid is a leading cause of uncompensated care.

In Wyoming, Medicaid reimburses hospitals just 84 cents for every dollar of service they render to patients. Medicaid and Medicare combined account for half of all the care Wyoming's hospitals provide that isn't fully paid for.

In states that expanded Medicaid, uncompensated care hasn't fallen as promised. According to Moody's Investors Services, hospitals in states that expanded Medicaid are no more profitable than ones in states that rejected expansion. After Illinois expanded Medicaid in 2013, Southern Illinois Healthcare lost $14 million caring for Medicaid's new patients.

2) Expanding Medicaid will increase uncompensated care.

Patients that would be covered by Medicaid Expansion are already eligible for generous premium tax credits and other subsidies to buy private insurance. They can go on Obamacare's insurance exchange and purchase coverage for only $38 in monthly premiums and a $150 deductible, for a total annual cost of $606. That's about half of the cost of the average cell phone bill.

Under Medicaid Expansion, these individuals will lose their private insurance and must enroll in Medicaid for their health insurance. As more individuals use Medicaid, the program will underpay for even more services. Hospitals will rack up even more uncompensated care and taxpayers will be left with the tab.

(3) The Medicaid Expansion "solution" will cost more than the uncompensated care problem.

Every year, Wyoming taxpayers compensate hospitals $41 million through property taxes for their uncompensated care. This costs the average Wyoming family $180 every year in taxes. But according to the Congressional Budget Office, the federal government will spend $931 billion on Medicaid Expansion by 2022. This would cost every family $839 more in annual federal taxes and interest on our debt.

Contrary to Medicaid Expansion's proponents, rejecting Medicaid Expansion is actually saving taxpayers money. Since Wyoming and 19 other states refused to expand Medicaid, $392 billion won't be spent by Washington on this government entitlement. This will save the average family $3,181 in taxes over the next eight years.

Despite what Governor Mead and interest groups say, money from Washington DC is never free. We all have to pay for it through our federal tax burden, the attached strings and any inefficiency taking federal money creates. Wyoming's legislators should keep that in mind as they contemplate expanding Medicaid in 2016's budget session.