Obamacare boosted Ky. hospitals, but bad debts are rising again due to high-deductible plans, and the law's future is uncertain

Baptist Health Richmond is among hospitals featured in the story.

Kentucky's expansion of Medicaid under the Patient Protection and Affordable Care Act turned out better for the state's hospitals than they expected, but they worry about its future, Josh Shepherd writes for The Lane Report, a Lexington-based business magazine.

While two Kentucky hospitals closed soon after the expansion began in 2014, "Elizabeth Cobb, vice president for health policy at the Kentucky Hospital Association, points out that there have been no hospital closures in the past several years and revenue from Medicaid expansion has stabilized several community hospitals that were considered financially at risk in 2014," Shepherd reports.

Cobb told Shepherd that Kentucky's health-care industry is much more stable now than it was earlier in this decade. "Medicaid expansion is partially responsible because residents who gained insurance coverage sought care and created a revenue surge," Shepherd writes. "More importantly, she said, provider systems have shifted away from over-reliance on inpatient hospitalization to generate income."

When Kentucky expanded Medicaid, "Hospital administrators worried that expanding eligibility to families with incomes up to 138 percent above federal poverty guidelines would negatively affect their payer mix by shifting patients from commercial insurance to Medicaid, which pays less reimbursement for services," Shepherd notes. But KHA found that the 103 percent increase in the Medicaid population was mostly from people who didn't have insurance and would have otherwise been treated as charity cases. Hospitals reported significant decreases in bad debt.

"The increase in Medicaid enrollment has produced a significant net gain in most hospital revenues across the commonwealth," Shepherd writes. "According to the Kentucky Hospital Association, rural hospitals have been helped tremendously by providing a federal payer where there once was just mounting bad debt owed by private payers." However, more individual patients now have high-deductible plans that are putting them in debt to hospitals, Shepherd reports.

The Medicaid expansion is in doubt because of a last-ditch attempt by Republicans in Congress to repeal the reform law. Even if that fails, federal officials are expected to approve Gov. Matt Bevin's request for a waiver of rules allowing changes that would tamp down enrollment and introduce "deductibles for recipients as an incentive to 'avoid unnecessary care'," Shepherd notes.