FactCheck.org finds little support for Sen. Rand Paul’s claim that Medicaid expansion will ‘bankrupt’ Kentucky hospitals

U.S. Sen. Rand Paul said on ABC‘s “This Week” Sunday, Nov. 3 that the federal health-reform law may “bankrupt” rural Kentucky hospitals “by overwhelming them with Medicaid patients.” However, health-care leaders in the state “say its hospitals stand to benefit, since the expansion would provide
insurance to those who otherwise wouldn’t be able to pay their hospital
bills,” reports FactCheck.org, a nonpartisan service of the Annenberg Public Policy Center at the University of Pennsylvania.

Sen. Rand Paul (ABC News)

Paul made his remarks when host George Stephanopoulos asked him if the successful launch of the state’s insurance exchange showed that Obamacare can be successful. “Well, nearly 90 percent of them are signing up for Medicaid, free health insurance from the government,” Paul replied. “My concern is not that we shouldn’t help people. I do want to help these people to get insurance. But there is going to be a cost.
And in my state, we have a lot of rural hospitals that teeter in the balance. My fear is that these hospitals may be bankrupt by overwhelming them with Medicaid patients.”

At the time Paul spoke, the latest figures were that 85.7 percent of Kentucky enrollees were in Medicaid. A week later, the figure had declined to 82 percent of a total of 40,572. Exchange Director Carrie Banahan said Nov. 10 that she expects the Medicaid percentage to be about 70 percent by Dec. 31. She noted that Medicaid qualification is faster than enrolling in a private health plan because the income qualification is automatic, and 16,425 people have been determined eligible for subsidies for private plans through the exchange.

Gov. Steve Beshear announced in May that the state would expand Medicaid to people with incomes up to 138 percent of the federal poverty level; the previous threshold was 69 percent.

Eugene Kiely of FactCheck notes that the Robert Wood Johnson Foundation and Urban Institute said in March 2013 that hospitals should expect more revenue from Medicaid expansion; that the month before, Kentucky Hospital Association President Michael Rust said likewise; and so did Foundation for a Healthy Kentucky President Susan Zepeda several months earlier.

“That’s not to say there are no concerns in Kentucky about expanding Medicaid,” Kiely writes. The state does not have enough medical providers to serve its population, even without the 300,000 residents who are newly eligible for Medicaid. In an email to Kiely, Zepeda said the foundation “remains very concerned about the capacity of the state’s health-care system, particularly in rural areas, to cost effectively care for a much larger number of patients.”

Zepeda also noted the problems that hospitals have had being paid by insurance companies that are now managing Medicaid for the states, but the foundation “still believes the state’s residents and hospitals will benefit from the expansion,” Kiely reports.

Paul’s staff did not respond to inquiries from FactCheck. For its analysis, click here.

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