Impact of Medicare Sequester v. Medicaid expansion on providers

The Advisory Board has a new analysis of the impact on hospitals of the looming Medicare cuts that are a part of the Sequester. (h/t @ddiamond)

Although most of the sequestration cuts target defense and domestic discretionary spending, the deal includes a 2% cut to Medicare payments. The OMB’s analysis suggests that number is equivalent to about $5.8 billion in hospital payment reductions in FY 2013.

Most interestingly to me, they note a smaller average negative impact on hospital margins (1.6% reduction in 2021 margins) of the Sequester than a potential decision by a State to not undertake the now-optional Medicaid expansion (projected 2.5% reduction in 2021 margin, on avg). They note large cross-state differences in the potential impact of the Medicaid expansion (or not).

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