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Moody's Pushes for Medicaid Expansion

10:24 AM, Mar 15, 2013 • By DANIEL HALPER
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In a report on its website, the credit rating firm Moody's pushes for Medicaid expansion. The firm warns that states who do not expand Medicaid will face "political and budgetary pressure."

"The upcoming reductions called for in the Affordable Care Act to federal disproportionate share hospital (DSH) payments, estimated to rise to $17 billion annually by 2019, will lead to political and budgetary pressure on state governments as they seek to replace the lost funds says Moody's Investors Service. Hospitals providing high levels of charity care and with heavy Medicaid loads will be most vulnerable to budget shortfalls because of the DSH reductions," the firm's summary of the report reads.

"Pressures will be greatest in states that opt out of Medicaid expansion, but have a relatively high proportion of uninsured residents. ... The DSH reductions are expected to be covered by the lower cost of charity care, as the Affordable Care Act is aimed at lowering the ranks of the uninsured. However, states that opt out of the Medicaid expansion, as the June 2012 Supreme Court ruling on the Affordable Care Act allows, may face large uninsured populations at the same time that the DSH payments decline."

Moody's senior vice president says in a statement, "States that opt out of Medicaid expansion will have to choose whether to compensate for the shortfalls with their own funds or leave hospitals to absorb the costs, which will increase rating pressure on the hospitals. ... States that choose to fund uncompensated care costs themselves could face budgetary strain."

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