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Fact Check: Will a Surge in Medicaid Enrollment Hurt Colorado Hospitals?

June 24, 2020 / The Denver Post
Normal ECG line representing claims that are true

A recent Denver Post report warned that Colorado hospitals, which have already suffered major financial damage from the COVID-19 pandemic, are about to suffer hundreds of millions of dollars of additional budget cuts due a massive surge in Medicaid enrollment.

CLAIM: According to the Denver Post, a major increase in the number of Coloradans who need Medicaid coverage will inflict further damage on the state’s healthcare system, because Medicaid pays hospitals below the cost of treating patients.

FACT:

This is true. The impact of COVID-19 on the Colorado economy has been extraordinary and unprecedented. More than 500,000 people have filed for unemployment in recent months, and state officials project enrollment in the state’s Medicaid program to increase by roughly the same number.

In its reporting, The Denver Post references a recent analysis from the Colorado Health Institute. According to CHI:

“Most of the expected new Medicaid members formerly had employer-sponsored insurance, which reimburses hospitals at a much higher rate than Medicaid. When those patients need hospital care, Medicaid will pay for that care at a significantly lower rate than private insurers.” 

Over the coming year, the sudden shock of hundreds of thousands of people moving out of private health insurance and into a government-run plan could result in a $500 million revenue loss for Colorado hospitals, CHI predicts.

This would be a major hit to hospital budgets at the best of times, but it’s significantly worse because of the financial stresses of COVID-19. According to Fox 31 Denver, hospitals across the state are already bracing for losses of more than $3 billion because of the burdens of fighting COVID-19.

As CHI analyst Spencer Budd told the Denver Post: “The fear would be that any financial pressure on hospitals could have access implications for patients, particularly in a rural area.”

In a separate interview, the Colorado Hospital Association’s Katherine Mulready explained what “access issues” could mean for the healthcare sector and the patients who depend on it. “Collectively those hits are likely to mean potentially layoffs, potentially service line cuts, longer waiting times for patients,” she told the Denver Post.

Taken together, the CHI analysis and the Denver Post’s reporting paint a deeply concerning picture: Hospitals that are reeling from the impact of COVID-19 are about to be hit again by a massive expansion of the Medicaid program, which pays far less for treating patients that private insurance does.

It remains to be seen how the impact of COVID-19, both directly and indirectly, will affect discussions over healthcare policy in Colorado. But it’s likely any future proposals will be measured by a simple standard – will it help healthcare professionals and institutions get back on their feet, or will it make matters worse.