Visit our website ⇒

Medicaid is Iowa’s health care program for our poorest citizens.  Despite what you hear about the strength of our state economy, the sobering fact is that the Medicaid rolls in Iowa continue to grow every year. There are now roughly 400,000 Iowans on Medicaid; that’s more than 13 percent of the state’s population.  Nearly 240,000 of these people are children.  Approximately half of all births in Iowa are now covered through the Medicaid program.

There is also a growing number of poor, elderly folks who are dually-eligible for both Medicare and Medicaid. They represent mostly the chronically ill people who are most reliant on Iowa’s health care system.  More about them later.

And at the end of the day, who stands in the breach to make sure that our friends and family have access to quality health care through the Medicaid program?  It’s Iowa’s community hospitals and their dedicated health care professionals.  Their care is provided all day, every day, regardless of the fact that Iowa’s Medicaid payment rates – like our Medicare payment rate – are among the lowest in the nation.

Yet, we are faced with budget proposals that cut hospital and physician payments under Medicaid.  That’s right.  Despite one of the lowest unemployment rates in the nation; despite the state’s mandatory reserve funds being full; and despite state revenues running ahead of projections, both the governor’s budget proposal and the budget approved by a House committee cut Medicaid payments to Iowa’s health care providers.

At issue is Medicaid’s desire to end what are called “crossover claims” for those dually-eligible Medicare and Medicaid beneficiaries.  Essentially, when a person is covered by both Medicare and Medicaid, Medicare pays the main portion of the bill and Medicaid covers the patient’s co-pays and deductibles.  Medicaid believes that payment for services shouldn’t exceed the normal overall payment – which, of course, would be lower than that Medicare base payment the hospital already received.

The net effect is that Medicaid would no longer pay co-pays and deductibles for these patients.

This plan would save the state $5.4 million in hospital payments and $3.8 million in physician payments.  But when the loss of federal matching funds is included, the total cost to hospitals would be $13.5 million and the costs to physicians – most of whom are employed by hospitals – would be an additional $9.5 million!

For hospitals, this represents about a 2 percent Medicaid payment cut.  It’s also worth mentioning that, just last year, the Legislature reduced Medicaid payments for emergency room services.

The impact of this policy change would be more than a financial hit on health care providers.  It would affect patients, too.  As a CFO from one of the state’s smaller hospitals recently pointed out, “This does not include the impact of Medicare patients who will suddenly be confronted by bills for co-pays and deductibles.  These patients may simply opt out of the health care system because they can no longer afford it.  Or they may delay care until they are very ill, increasing utilization of costly emergency and inpatient services.  This approach to cutting the Medicaid budget appears to be very short-sighted.”

Simply put, this is a bad idea. Besides creating an inefficient way to lower state health care commitments when it’s not fiscally necessary, cutting Medicaid spending is a poor financial strategy for the state.  Medicaid is a shared state/federal program, meaning state dollars are matched by federal dollars.  Actually, Iowa receives about a dollar and a half for each state Medicaid dollar, so it’s more than a match; it’s an investment that, if cuts are made, more than doubles the loss of revenue.  It just doesn’t make fiscal sense.

This is why IHA and hospital advocates from all over the state are telling state legislators that cutting health care is the wrong way to balance Iowa’s budget.  We hope more Iowans will join hospitals in sending this message.

Leave a Comment

Please take a moment to read through our comment policy.

If you would like a photo to appear next to your comment, you'll need to upload a gravatar.