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Oppose Cuts and Promote Regulatory Relief

Background

Erosion of government reimbursement threatens access to health care services. In 2015, more than 1/3 of Iowa’s hospitals reported a flat or negative operating margin ranging from 0 to -22 percent. Iowa’s transition to Medicaid managed care has has led to increased administrative costs, inefficiency and care denials putting hospitals and patient at risk. In 2017, the Iowa Legislature passed approximately $77 million in “cost containment” measures that further reduced Medicaid reimbursement for hospitals. When Medicare/Medicaid fail to cover the cost of care, hospitals absorb the costs as bad debt and charity care. 60 percent of hospital revenue is derived from government-funded health insurance programs. Hospitals have seen a 20 percent increase in charity care in 2017 compared to 2016 indicating significant underpayment.

These losses translate into a cost-shift to the private sector which drives up health insurance costs and negatively impacts hospitals’ ability to react to public health needs and invest in community services.


Action Needed

  • Iowa hospitals are already facing more than $5 billion in payment reductions. Continued cuts threaten access to quality health care services and damages the state’s health care infrastructure.
  • Reduce administrative activities related to regulatory compliance so that clinicians can spend more time on patients rather than paperwork.
  • Regulatory burdens cost $1,200 every time a patient is admitted to a hospital. Compliance can cost $7.6 million annually per hospital.