Medicaid expansion in Kentucky added $1.16 billion in new revenue to healthcare providers in 2014, with hospitals receiving more than $506 million of the funds, according to a report released on Feb. 12 by the state governor’s office.
Hospitals also saw a 55 percent reduction in uncompensated care visits in the first three quarters of 2014, according to Deloitte Consulting and the University of Louisville’s Urban Studies.
Revenue is projected to accrue. Between 2014 and 2021, an estimated $20 billion will be paid to medical providers. Hospitals should realize about half of that, or $9.2 billion, according to the report.
A supplemental report on Medicaid reimbursements also noted positive fiscal impacts of the expansion, particularly for hospitals.
In 2014, Disproportionate Share Hospital payments totaled more than $199 million, on top of Medicaid payments.
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Medicaid expansion in Kentucky went into effect Jan. 1, 2014.
From 2013 to 2014, healthcare provider revenue from Medicaid grew by more than 26 percent, according to the Deloitte study. Pharmacy revenue was up 58 percent; primary care up 52 percent and hospitals showed an average of 27 percent growth in receipts, according to the report.
More than 375,000 residents signed up for Medicaid expansion. Kentucky saw the second largest decrease of any state in its uninsured rate, dropping to 12 percent from 20 percent, a 42 percent reduction, according to a Gallup poll.
Medicaid expansion is expected to add 40,000 jobs and pump $30 billion into the state’s economy over the next six years.
The net positive impact of close to $820 million to state and local government budgets more than offsets the cost of expansion in the upcoming biennial budget, the report stated. Had the state chosen not to expand, it would have incurred $100 million in costs, it said.
Despite being called a “budget-busting boondoggle” by naysayers. Medicaid expansion is working, said Gov. Steve Beshear, a Democrat.
“It’s literally paying off,” Beshear said in a statement. “The state is saving money, hospitals are earning more and our people are getting healthier.”
For states choosing Medicaid expansion, the federal government pays the full cost of health care for the first three years. After that, states are required to contribute a percentage match, reaching 10 percent by 2021.
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Individuals and families earning up to 138 percent of the federal poverty line are eligible to enroll in the federal health insurance program.
Deloitte reported that Kentuckians who qualified for Medicaid expansion had a pent-up demand for preventative services and sought healthcare at a 55 percent higher rate than some existing Medicaid enrollees, particularly for treatment of chronic conditions such as high blood pressure, diabetes and depression.
The report was commissioned by the Kentucky Cabinet for Health and Family Services.
Twitter: @SusanMorseHFN