Findings support Lewin Group report on impact of Medicaid cuts

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HARRISBURG, PA (June 29)—The Hospital & Healthsystem Association of Pennsylvania (HAP) today said that a new study by the Federal Deposit Insurance Corporation (FDIC) reinforces the importance of healthy hospitals to the state’s economy.

“The FDIC report found that the state’s health care sector ‘is a key driver of economic growth,’” said Carolyn F. Scanlan, president and CEO of HAP.

According to the FDIC report, “Since 1990, health and social services professionals have accounted for an increasing share of Pennsylvania’s workforce, now representing 14 percent of all jobs. Pennsylvania ranks among the top ten states in health and social workers per capita and ranks third as a percent of the workforce.”

The FDIC’s findings reinforce the results of a recent study of state and national health care data by The Lewin Group (Lewin), one of the nation’s leading health care consulting firms, which found that the proposed state Medicaid cuts will have a devastating impact on patients, hospitals, and the health care delivery system.

Among the key findings from the Lewin study:

• Medicaid hospital payment-to-cost ratios are 74.9 cents per dollar of care provided, and could fall to 67.4 cents under the proposed budget.
• The proposed budget will have a $330 million impact on hospitals and the health care system.
• Under the proposed state budget, the percentage of Pennsylvania hospitals with negative operating margins could rise to 55 percent—well above historic levels.
• Making up for the proposed hospital Medicaid cuts would require a 3.1 percent increase in private insurance reimbursements—which would further increase the upward pressure on escalating health insurance premiums.

“The FDIC and Lewin findings confirm what we have been saying since the budget was proposed in February,” Scanlan said. “The proposed Medicaid cuts harm patients, communities, and hospitals. Ultimately, the state’s economic recovery through health care job growth could be jeopardized. The financial burden of this essential safety net program will be shifted from state government to Pennsylvania’s hospitals and the private insurance market—amounting to a hidden tax on the private sector.”

“This will result in higher health care costs for all Pennsylvanians, and patient access to care will be further jeopardized as hospitals are forced to reduce services and staffing,” Scanlan said. “Medicaid cuts impact all hospital patients, physicians, and nurses.”

“Our patients and the communities we serve cannot bear the burden of additional Medicaid cuts that hurt patients and jeopardize the continued availability of the hospital care they depend on 24 hours a day, seven days a week,” Scanlan said. “We urge the Governor and the General Assembly to assure that Pennsylvania’s health care safety net is strong.”

HAP is a statewide membership services organization that advocates for nearly 250 Pennsylvania acute and specialty care, primary care, subacute care, long-term care, home health, and hospice providers, as well as the patients and communities they serve. Additional information about HAP is available online at www.haponline.org.

FDIC report:
http://www.fdic.gov

Lewin report:
http://www.haponline.org