New York’s Hospitals

You may recall that yesterday we were discussing the reasons that we don’t have as many hospital beds as might otherwise be the case. Reasons proposed included that they weren’t necessary, the increasing move to outpatient procedures, certificates of need, and other factors. This morning the editors of the Wall Street Journal have another culprit in mind affecting New York State in particular—low Medicaid reimbursement rates:

Twenty some hospitals have closed in New York City alone over the last two decades, most located in low-income communities. Statewide the number of hospital beds per-capita has fallen by 13% since 2010, according to the Kaiser Family Foundation. The number of beds across the U.S has also decreased due to declining demand as care has shifted to lower-cost outpatient centers. But New York hospitals have been closing due to financial duress amid increasing demand by low-income patients.

Blame New York’s miserly Medicaid program, which reimburses providers far below the cost of care. Physicians are on average compensated at 56% of what Medicare pays—the fourth lowest in the country after Rhode Island, New Jersey and California—and Medicare also pays below cost. Hospitals typically make up for paltry government payments by charging privately insured patients more, but hospitals that treat mostly Medicaid and Medicare patients don’t have this option.

Many doctors in New York also don’t accept Medicaid patients because of low payment rates, so low-income folks stream to emergency rooms when they’re sick. This has caused a financial contagion among hospitals. When one closes, patients flock to others nearby and increase their financial strain.

Recall how Democrats claimed that expanding Medicaid under the Affordable Care Act to individuals up to 133% of the poverty line would reduce emergency-room visits. This hasn’t happened. Emergency-room visits per capita in New York have ticked up 3% since the ACA expansion took effect in 2014 and 7% since 2010.

While expanding Medicaid enrollment, Mr. Cuomo in 2014 sought to rationalize costs with an $8 billion federal grant for putative payment reforms aimed at reducing ER visits. “Will it mean some hospital beds are reduced?” Mr. Cuomo said at the time. “Yes, because that is the point of the exercise. You will have a decrease in beds.”

I cannot testify as to the veracity of this claim. I also have some problems with how they’re framing the issue in particular because most of the costs in health care are wages and I don’t believe you can have a market in health care services as long as 60% of the freight is borne by Medicare, Medicaid, and other federal, state, or local government programs.

I’m just passing this along as more fuel for the fire.