Indiana’s hospitals face Obamacare timing problem

Back to TopCommentsE-mailPrintBookmark and Share

Obamacare is creating a timing problem for Indiana hospitals.

The delays of the employer mandate penalties that are expected to boost private insurance coverage, along with ongoing negotiations on an expansion of Medicaid in Indiana, mean it will be another year or two before hospitals see the additional revenue the law was supposed to bring them.

The Obama administration, which already said it would not enforce employer taxes for failing to provide affordable health insurance until 2015, issued another year’s delay Feb. 10 for companies with 50 to 99 employees.

Those moves are “credit negative” for not-for-profit hospitals, according to report issued last week by Moody’s Investors Service.

“The delay in the employer mandate causes a timing mismatch between the benefit of fewer uninsured patients and the negative impact hospitals face related to reduced payment updates and cuts to Medicare and Medicaid,” Moody’s analyst Sarah Vennekotter wrote in a Feb. 20 report.

Indeed, Obamacare’s cuts to hospital reimbursement, along with additional cuts passed as part of Congress’ latest budget agreements, are already taking a tangible toll.

Those cuts will total more than $6.5 billion between 2010 and 2019 for the roughly 165 hospitals in Indiana, according to the Indiana Hospital Association. That’s about $654 million per year, on average, over the decade.

Indiana hospitals bring in revenue of roughly $14 billion a year. So the federal cuts equal about 4 percent of hospitals’ net income. But cuts of that magnitude would effectively wipe out hospital profits.

And for rural hospitals, where profit margins are thinner, the cuts are pushing them into the red—if not matched by offsetting expense cuts.

Hospitals have responded with expense cuts. Three of the nation’s largest hospital layoffs last year occurred in Indiana, at Franciscan Alliance, Indiana University Health and St. Vincent Health. And smaller, county-owned hospitals have been cutting, too.

The hospitals facing the biggest reimbursement reductions serve lots of Medicaid patients and previously received “disproportionate share” payments for caring for a higher-than-normal number of poor patients. In Indianapolis, that’s Eskenazi Health, IU Health’s Methodist Hospital and Community Health Network’s East hospital.

But pretty soon, the cuts won’t just be staff; it will be entire services, warned Ed Abel, a hospital accountant at Indianapolis-based Blue & Co. He noted that roughly 20 percent of all Indiana hospitals don’t deliver babies—except in emergencies. Literally, every other year, more hospitals join that list.

“Sooner or later, whether they like it or not, they are going to have to consider whether they can continue to perform all the services they do,” Abel said.

The Obamacare cuts are difficult because they are certain, Abel said, while the benefits of coverage expansion can’t be quantified yet.

In Massachusetts, which passed a system similar to Obamacare in 2006, employer-sponsored coverage had increased 1 percentage point by 2013, even as the rest of the nation saw a 5.7-point decline in employer coverage, according to a report by the PricewaterhouseCoopers consulting firm.

Also, Indiana hospitals are hoping Gov. Mike Pence can make a deal with the Obama administration to expand the Healthy Indiana Plan, which would expand health insurance coverage to an estimated 182,000 Hoosiers with incomes below the federal poverty line.

If both those things happen, Abel said, hospital revenues should remain roughly where they were before Obamacare—depending on which hospital you’re talking about.

“There are some hospital executives that feel like it will result in an increase in payment, and there are some that think it will result in a decrease in payment. It’s kind of a glass-half-full, glass-half-empty sort of thing,” Abel. “The problem is, we don’t really know how much is being poured into the glass.”


Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. Good Day I am Mr (Victoria Wright) from United state of America, i stayed in NEW YORK, and i have a broke up business, until i found this company email who help me to gain a loan for business,, and now i want to used this short medium to congratulate the below company for the fast and safe money they loan to me without any form of collateral, i loan 500,000USD from the company to save my business and lots more, i saw their mail on the internet, everyone always give testimony for what they did, so i quickly contacted them and they all did everything for me without stress and my money was sent to my account just 3 days later, i was surprise and i feel so glad, now i have a standard business control agent who help me, now i will advice those who need urgent loan to contact him at the bellow email:zenithfirm12@gmail.com

  2. NOTICE:This is to inform the general public that Vampires are real. My name is James Franklyn.,am an agent of vampire,am here to introduce our new world trend to you,a world of vampire where life get easier,we have made so many persons vampires and have turned them rich,you will be assured long life and prosperity,you shall be made to be very sensitive to mental alertness,stronger and also very fast,you will not be restricted to walking at night only even at the very middle of broad day light you will be made to walk.In case you are wildly oppressed by some unscrupulous persons we can still help you fight them.Your protection is assured immediately you join.Just contact the bellow email if you are interested we are here to attend to you anytime you want us. Contact the bellow email for more details. Email:vampirescreed@hotmail.com Sincerely: James Franklyn.

  3. Bravo! Someone else that is willing to speak the truth! Bravo!_____NBCSN is available in almost 2 MILLION more homes than just a few years ago, but Indycar STILL gets less total viewers than it did just a few years ago when NBC took over Versus. Attendance and ratings cratered with the end of season races (just when the title battle got "interesting" HAH!__________And now...new race in Basilia, where Miles celebrated the "rich history" of Indycar racing there. Rich history? What, 7 events in the 100 years of AOW? Yep, some history. Well, at least its an oval. It's not??? Are you kidding me??? Gosh darn road racin furriners.

  4. PURITY RAY LOAN OFFER........ Have you been denied by your banks,or are you in need of of an urgent loan to pay of your bills we are capable of giving loans @ cheaper rate to interested individuals, student, companies and members of the public in need of finance to settle bills, we do offer considerable loans which you can count on. For more information on our various types of loan,then you will have to contact PURITY RAY LOAN FIRM, to help you achieve your desire LOAN APPLICATION FORM TO BE FILLED BORROWERS INFORMATION * Full name:………………………. * SEX * ……………………………. * Country………………………….. * State:……………………………. * Land:…………………………….. * Occupation:…………………….. * phone number:…………………. * Telephone: ………………………….. * Age:………………………………. * Amount needed as loan:……… * Loan Duration:………………….. * Propose of Loan:……………….. * Annual revenue:………………… * Monthly Income:……………….. * Guarantee:………………………. * Payment: monthly or annually Email.....purityrayloanfirm@gmail.com Thank you and God bless Mr Purity Ray PURITY RAY LOAN FIRM we tend to serve you better

  5. Problem: most of the people responding to this article don't know about this service AT ALL! Why? Lack of awareness. This isn't IndyGo. This is CIRTA: might as well be the mattress company because they are asleep at the wheel - something like 3 directors over the last year? Playing with federal grant money is great! This "region" wants commuter rail service, has spent MILLIONS on Transportation studies yet can't even support a commuter bus line? This is largely for suburban riders to get to downtown - not for "service people to work in our hotels and restaurants" ! Get your head out of your backside!! These are professionals, students etc. that don't want to fight traffic, save some money on parking, gas, stress.... if CIRTA would put their federal money into widely promoting the sevive to Greenwood, Fishers & Carmel instead of finding directors and studies - this would be a successful service. Our family uses(d) it daily for the last several years - but the recent uncertainty & now unreliability due to cuts from Carmel has been a problem. Now, costs us an additional $350/month for gas & parking ( $4200/year) plus vehicle wear, service, environmental impact ... YES - this REGION needs this this type of service in order to keep growing and getting the people it needs to fill skilled positions in downtown Indianapolis. Think outside of your own car !!!