Pennsylvania’s hospitals and health care providers could be among the biggest losers under President Donald Trump’s tax cut and spending bill, which passed the U.S. House on Thursday and will be sent to Trump to sign into law.
The bill advances many priorities of the Trump administration, including extending the president’s 2017 tax cuts, ending federal income taxes on tips, and increasing military and border spending.
The bill also will cut an estimated $800 billion to $930 billion from Medicaid, Medicare and plans offered by the Affordable Care Act, mostly through adding new work requirements. The Congressional Budget Office estimates that as many as 11.8 million people could lose health insurance coverage over the next decade.
For Pennsylvania hospitals, the cuts amount to about $4.5 billion per year over the next decade, said Nicole Stallings, president and CEO of the Hospital and Health Association of Pennsylvania. Millions losing health insurance would have a downstream effect on hospitals and health networks across the U.S. and Pennsylvania.
“Significant cuts to coverage will drive up the number of uninsured in the state and therefore add to uncompensated care in our hospitals,” Stallings said.
She added that people losing insurance will delay care, which will result in increased cost of care down the line and potential unintended consequences such as lost work time.
Hospitals also expect to be negatively impacted by caps to be placed on provider assessment taxes and state directed payments, Stallings said. The provider assessment tax is money that hospitals pay to states, which then generate a matching amount obtained from the federal government. Hospitals in turn receive the full amount they paid in taxes back as well as that match amount.
Under the spending bill, the amount hospitals can pay in and the match amount they receive both would be capped, essentially reducing Medicaid reimbursements to hospitals.
“State-directed payments are necessary because they help bridge the gap between hospitals’ actual cost of providing care and the years of inadequate reimbursement from Medicaid. It’s a critical funding stream,” Stallings said. “These significant cuts that were included in the Senate bill are of such a magnitude that our hospitals won’t be able to bear that additional cost; it will cause them to limit services or in some cases, perhaps even close.”
Stallings said at present, Medicaid reimburses Pennsylvania hospitals on average 82 cents per $1 of care, with rural hospitals receiving just 74 cents per dollar. However, with the alterations to the tax and state-directed payments, Medicaid reimbursements in the state would fall to just 53 cents per care dollar.
She said over half of the hospitals in the state are operating with negative margins, and a shock to their fragile state could break them.
The Lehigh Valley’s health systems were quiet on the impact of the bill.
Lehigh Valley Health Network, part of Jefferson Health, said in a statement, “We are closely monitoring the legislation and the impact the proposed cuts could have on the communities we serve. We will continue to provide the best possible care to patients, regardless of their ability to pay.”
St. Luke’s referred questions to the Hospital and Health Association.
Rural hospitals and hospitals in underserved areas are expected to be hit hardest by reduced reimbursements, Stallings said. Advocates fear more than 300 hospitals nationwide, including five in Pennsylvania, could end up closing due to the cuts.
The bill includes a rural hospital stabilization fund; however, opponents argue that the amount provided by the fund would not cover the full amount that rural hospitals are expected to lose due to the new caps put in place.
“That funding comes back to hospitals to really supplement that gap in funding and to ensure that critical services remain in communities like maternal health care services and behavioral health care services. These are long-standing state and federal partnerships. Every year, they are approved by the Centers for Medicare and Medicaid Services and what the Senate provisions do is drastically cut that funding that our hospitals rely on,” Stallings said.
Stallings added that all hospitals would be impacted, as well as nursing homes and managed care organizations. She said if hospitals close or are forced to scale back services, there will be job losses and economic fallout.
“Our communities will be less healthy and overall our Commonwealth will be less competitive,” Stallings said.
