Study: Medicaid work requirements could decrease hospital revenue

A recent study found that hospitals may see lower revenue and higher uncompensated care costs in states that implement Medicaid work requirements. States-specific Medicaid program designs may help to mitigate the potential impact, depending on how many beneficiaries lose coverage.

The study, released March 14 by the Commonwealth Fund, a private fund focused on healthcare policy, delivery system reform, and access, examined the potential financial impact of states’ efforts to add work requirements as a condition of Medicaid coverage. Based on data from Arkansas’ recent implementation of work requirements and other recent data, the report estimates that hospitals could lose between $3.7 billion and $4.1 billion in 2019. However, the estimates vary when broken down by state. The report projects that hospitals in Arizona, Arkansas, and Ohio could see revenue decline by 10%-14% because the work requirements would apply only to individuals who qualify under the Affordable Care Act (ACA) Medicaid expansion. In contrast, Kentucky hospitals could see revenue decline by 20%-22% and revenue at Indiana hospitals could decline by 18%-20% because those states’ work requirements would apply to the Medicaid expansion population and the traditional Medicaid population.

The reduction in revenue could be coupled with a rise in uncompensated care costs, particularly in states that did expand Medicaid under the ACA, because more individuals would likely be affected. Most individuals who lose Medicaid coverage under work requirements are not eligible for premium subsidies in the health insurance marketplaces because their incomes would be below the poverty level, according to the Kaiser Family Foundation. These individuals would also not have jobs that offer health insurance, the study said.