Hospitals’ uncompensated care costs drop $5.7B due to ACA
By - For approximately 10 years before the Affordable Care Act (ACA) was implemented, the number of Americans without health insurance had been steadily increasing, according to the Department of Health & Human Services (HHS). However, recent projections show that not only are more people insured, but hospitals will save $5.7 billion this year in uncompensated care costs because of the ACA.
Uncompensated care costs included the cost of charity care provided to uninsured patients and the cost of non-Medicare bad-debt expense, according to the report.
According to an HHS report, states that have expanded Medicaid will see about 74 percent of the total savings nationally, as compared to states that have not expanded Medicaid.
“Hospitals have long been on the front lines of caring for the uninsured, who often cannot pay the full costs of their care,” HHS Secretary M. Sylvia Burwell said in a statement. “Today’s news is good for families, businesses, and taxpayers alike. It’s yet another example of how the Affordable Care Act is working in terms of affordability, access, and quality.”
For the report, HHS used Hospital Cost Reports for 2011 and 2012, which are submitted to the Centers for Medicare & Medicaid Services (CMS) annually by all acute-care and critical access hospitals.
Specifically, the hospitals in states that have expanded Medicaid are estimated to save up to $4.2 billion, which is approximately 74 percent of the total 2014 national savings, according to HHS. Hospitals in states that chose to not expand Medicaid are projected to save up to $1.5 billion this year.
“Based on the available data, hospitals in Medicaid expansion states have seen substantial declines in their admission volumes of uninsured patients, declines in their volumes of uninsured patients visiting the [emergency department], and increases in admissions that are covered by Medicaid,” the report’s authors explained. “Hospitals in non-expansion states, by contrast, report relatively little change in these volumes.”
Therefore, uncompensated care costs are declining, according to the report. This is important for the hospital industry’s future financial performance. Additionally these results will affect hospitals’ ability “to remain clinically excellent and financially solvent in the setting of impending decreases in federal reimbursement for uncompensated care in coming years, as well as implications for state and federal governments.”
Another potential side effect for states that did not expand Medicaid is that they are more likely to have uninsured parents. Earlier this month, an Urban Institute study found that the number of uninsured parents living in states that have not expanded Medicaid increased from 50.9 percent in September 2013 to 61.3 percent in March/June 2014. However, when states did accept federal Medicaid funding, the uninsured rate for parents decreased by 33.3 percent.
