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

I think you have a couple of misconceptions.

Medicare is the FEDERAL government program for seniors and people with some disabilities. A federal government contractor directly pays hospitals for care provided to Medicare beneficiaries.

Medicaid is a state/federal program for low income people, especially children. The state directly pays hospitals, then the federal government reimburses the state for ~60% of the cost (depending on how poor the state is). This is the program they’re talking about in this article.

Neither program, nor commercial insurance, directly pays patients except in rare circumstances.