[TheMercenary]

This bit is what I have been talking about for months...

Medicaid cuts will probably accelerate next year when the eighteen-month Medicaid stimulus funding pulse runs out. Since Medicaid enrollment could increase by more than 30% due to health reform, we can expect low Medicaid rates to be a potent cash-flow offset to all of those new privately insured people. So the Medicaid trend is ugly for providers: enrollment way up, rates down, perhaps sharply. Almost half of those newly enfranchised by health reform will be Medicaid patients. There will also still be 25 million uninsured in 2016 according to CBO.

Further, providers expect Medicare to cut their rates, as well as their disproportionate-share hospital (DSH) subsidies. So providers, where they are able, will increase their rates to private health plans to compensate for these anticipated losses. Since many of them–hospitals and specialty physicians–are in monopoly or quasi-monopoly positions in their markets, they can still get net cash flow from private insurance rate increases. Cost shifting is a powerful tidal force despite the planned reduction in uninsured. (CBO could use some providers on their Healthcare Advisory Panel! It might affect its findings.)