Regents briefed on implications of ACA, Medicaid expansion

by Tom O’Connor, UNMC public relations | September 18, 2012

The University of Nebraska Board of Regents Business Affairs Committee was briefed Friday morning about some of the uncertainties and potential outcomes of the Affordable Care Act (ACA).

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UNMC's hospital partner, The Nebraska Medical Center, is a Disproportionate Share Hospital (DSH) because it sees a high number of indigent patients who are either on Medicaid or uninsured. UNMC's pediatric partner, Children's Hospital & Medical Center, also qualifies as a DSH facility.

The federal government provides payments to the DSH to compensate for the charity care they provide. DSH hospitals also are eligible for the 340B Drug Pricing Program, which provides savings between 20 percent and 50 percent on the cost of pharmaceuticals.

A significant loss

With the ACA, federal payments to DSH hospitals would be eliminated, which will result in an estimated $10.8 million loss for The Nebraska Medical Center and Children's Hospital & Medical Center, said Cory Shaw, chief executive officer, UNMC Physicians, the physician practice plan for UNMC.

"This would have major implications for the clinical enterprise of the UNMC College of Medicine," said Brad Britigan, M.D., dean of the College of Medicine, as clinical revenue provides nearly $60 million annually to support academic programs.

Examining the option

In June, the U.S. Supreme Court upheld the ACA but ruled that a provision expanding the Medicaid program is optional for states.

A report issued last month by Jim Stimpson, Ph.D., director of the Center for Health Policy and associate professor in the UNMC College of Public Health, showed that Medicaid expansion would bring in between 90,021 and 108,025 new enrollees in Nebraska through 2020. From 2014 to 2020, the total estimated cost of this expansion for the state of Nebraska would range from $140 million to $168 million.

Funding to exceed costs

The report indicated that these additional costs would be significantly outweighed by an influx in federal funds, which would range from $2.9 billion to $3.5 billion through 2020. These funds would:

  • Generate at least $700 million in economic activity every year;
  • Potentially finance more than 10,000 ongoing jobs; and
  • Save between $163 million and $325 million from costs in uncompensated care.

The silent tax

Without Medicaid expansion, Dr. Stimpson said more than $1 billion in uncompensated care would be provided through 2019.

This uncompensated care is mostly shifted to individuals and employers in the form of higher insurance premiums, sometimes referred to as the "silent tax."

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