why do state governments pay hospitals?

Question

I read this article in the NYTimes, and I don’t understand why hospitals are paid by states in the first place. Doesn’t Medicare pay individuals directly who then pay the hospital? Why the government middleman?

https://www.nytimes.com/2019/10/03/nyregion/medicaid-donation-hospitals-cuomo.html?smid=nytcore-ios-share

In: Other

Answer 1

Health insurance does not pay individuals, it pays directly to hospitals and doctors. Hospital then bills you for whatever insurance did not cover.

Sometimes state government is the insurer for Medicaid members andpays hospital directly. Sometimes state pays insurance premiums to commercial insurance companies (Aetna, Highmark, etc.), and those insurance companies pay the hospital. In either case, the state controls the prices that hospitals receive, and that translates into how much money the state has to budget for Medicaid.

And Medicare is not Medicaid. Medicare is run by federal government, not states.