Hospitals' Medicaid Freeze Compounded by Lost Federal Aid

COLUMBUS—With a looming freeze in Medicaid payments, Ohio hospitals could face reductions of nearly a quarter of a billion dollars in state and federal funding over the next three years.

President Bush signed the 2003 omnibus appropriations bill last week without adequate relief for hospitals, confirming fears that scheduled reductions in the Hospital Care Assurance Program (HCAP) would mean nearly $116 million in cuts to Ohio hospitals. 

Ohio hospitals are also looking at state reductions.  The governor’s proposed budget calls for a freeze in the scheduled updates in Medicaid reimbursement to hospitals. Ohio hospitals currently receive no compensation for approximately 10 percent of the care they provide to Medicaid patients. This shortfall, significantly increased by the proposed freeze, would grow by nearly $140 million from 2003 through 2005.

Hospitals must sustain these financial hits with little ability to control costs or cut corners. The proposed state budget takes no measures to control the pharmaceutical, labor, utility and other costs to hospitals or reduce their obligation to provide care for the uninsured.  Because scaling back on quality of care is not an option, funding cuts force hospitals to seek alternatives such as reducing services or in some cases shutting their doors.

In addition to the pressure the proposed freeze would put on Ohio’s hospitals, the state budget proposals also would reduce Medicaid eligibility for parents and eliminate services such as dental and vision.  Under these provisions, approximately 50,000 parents will completely lose Medicaid coverage and 800,000 will lose access to some services. More than one million Ohioans currently have no health insurance, though 80 percent of them are working citizens. Uninsured patients tend to put off preventative care, and even necessary care, until they need emergency attention. This is harmful to patients and costly to hospitals and the communities they serve.

For more information on how HCAP cuts and the proposed Medicaid freeze would impact Ohio, as well as county-by-county and hospital-specific information on the financial impact of these reductions, visit www.ohanet.org/medicaid/. A graphic representation follows.

View projected losses

The Ohio Hospital Association was established in 1915 and currently represents approximately 170 hospitals and 40 health systems throughout Ohio.  OHA’s mission is to provide leadership by working with member hospitals to meet the health care needs and improve the health status of the communities they serve. Visit OHA’s Web site at www.ohanet.org. For more information on top health care issues, visit the online OHA News Media Center at www.ohanet.org/media/.

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