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Wealthy hospital CEOs pushing Obamacare to save hospitals from bankruptcy

By Sarah May on
 March 8, 2023

Leaders of some of North Carolina's largest hospital systems rejoiced last week amid news that the state legislature had reached an agreement to expand Medicaid pursuant to provisions of the Affordable Care Act, as the Raleigh News & Observer reported, but even as the CEOs celebrate the idea of taxpayer-funded safety nets for their organizations, their own rates of compensation show no signs of slowing.

While the Medicaid program was originally intended to help pregnant women, lower income children, people with disabilities, and some seniors, it has been expanded in recent years to include able-bodied adults. Having been one of 11 holdout states that had not broadened eligibility for federally funded Medicaid programs, North Carolina's House and Senate granted the well-vocalized wishes of hospitals and the lobbyists who represent them, but that is not to say that the move is without its critics.

Legislature reaches deal

According to the Associated Press, the agreement reached by the North Carolina legislature is not likely to be voted on until later in the month but would raise the income limit for Medicaid eligibility from 41% of the federal poverty line up to 138%, as the News & Observer added, and if that occurs, upwards of 600,000 North Carolina residents could qualify for the Medicaid program.

The proposed framework, which Republican House Speaker Tim Moore described as "something that we can all be proud of," also provides that the state's 10% share of patient costs would be paid via assessments on hospitals, which in turn receive reimbursements for treating Medicaid patients.

In addition, the state would be poised to receive another $1.8 billion over a two-year period due to a financial incentive contained in a COVID-19 relief package designed to convince expansion-resistant legislatures to accept broadened eligibility.

Notably, the agreement would facilitate higher reimbursements for hospitals treating Medicaid recipients, something supporters of expansion contend will help relieve financial pressure on rural and other facilities at risk of closure.

Hospital leaders praise outcome

Health care executives across the state praised the potentially beneficial impact of expanded Medicaid eligibility, with Dr. Tom Owens, senior vice president for Duke University Health System observing, “We see patients every day who delay care because they don't have adequate or don't have any health insurance. They end up with severe consequences from that disease that could have been treated earlier."

WakeMed's president and CEO, Donald Gintzig, concurred, declaring that expanded eligibility will give greater access not just to treatment once someone is ill, but also to preventative practice that can help reduce the overall strain on the system.

A spokesperson for Novant Health added, “While we know this is just one step in the process toward passage, it's a step that is vital and moves us closer to the expanded, equitable and accessible care all North Carolinians need.”

Executive salaries raise questions

Those skeptical of the urgent calls for Medicaid expansion as a means to combat facility closures, however, would perhaps point to the skyrocketing salaries even of executives serving nonprofit hospitals in the state, as revealed by data from the North Carolina State Health Plan for Teachers and State Employees, as a plausible counterpoint.

While a “crisis of health care affordability” has arguably been taking hold across North Carolina, the numbers reveal that the nine largest hospital systems in the state paid their top executives a staggering total of $1.75 billion between the years of 2010 and 2021.

A shocking 20% of all hospital executive compensation went to a small group of CEOs, who pulled in a collective $308.8 million in that time frame, arguably rendering their demands for taxpayer-funded rescue programs hypocritical in the eyes of many.

As an example of the apparent dissonance between the CEO's advocacy regarding the financial Armageddon facing the state's health care system and their own massive earnings, Atrium Health's Eugene Woods – himself a proponent of Medicaid expansion – was paid $9.8 million in 2021.

Not a panacea

Though many of the well-paid heath care CEOs who clamored for Medicaid expansion in North Carolina seem to expect nothing but positives to flow from such a result, recent research from the Foundation for Government Accountability (FGA) suggests they may end up disappointed.

According to FGA's Hayden Dublois, nearly 50 hospitals have been forced to close their doors dating back to 2014 in states that accepted the expansion of Medicaid, owing largely to false promises made by the government that “misled policymakers” and made hospitals “victims of their own advocacy.”

FGA's research revealed that an “explosion in Medicaid shortfalls” resulting from the unexpectedly high cost of moving large numbers of Americans from private insurance plans onto Medicaid led to massive losses for the states and the hospitals in them.

Therefore, while hospital executives in North Carolina appear convinced that, if ultimately approved by the legislature, Medicaid expansion will go a long way toward solving their most pressing health care dilemmas, the experiences of states that have already made the leap should perhaps serve as a cautionary tale.