Medicaid expansion will not cure hospitals’ financial woes, according to a report released by the Congressional Budget Office. To put it bluntly, hospitals made a horrible deal by endorsing Obamacare in 2009. They agreed to annual reductions in their Medicare payments forever in exchange for a one-time increase in the number of insured patients. But Medicaid’s payment rates are below hospitals’ average costs, [and] the use of hospitals’ services among the newly insured will increase by about 40 percent as a result of having insurance.” If Medicaid pays hospitals less than their average costs, then inducing additional patient demand by expanding coverage could actually exacerbate hospitals’ shortfalls, not improve them.
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