Medicare’s Expansion Hits Disproportionate Share Hospitals
The number of uninsured adults fell by 10.6 million which is good news for disproportionate share hospitals.
- Over the past year, the number of uninsured adults fell by 10.6 million according to a survey conducted by the Urban Institute which is good news for disproportionate share hospitals (DSH) caring for low-income and uninsured individuals. According to an article published by the Kaiser Family Foundation, in 2013 hospitals provided uninsured individuals with $44.6 billion in healthcare.
With the number of uninsured adults falling, so will the demand for DSH funding which, as published earlier this year in areportfrom Health Affairs, is anticipated to be reduced by roughly $35.1 billion between the fiscal years of 2017 and 2024.
Medicaid expansion is voluntary, and each state is allowed to choose independently on whether to expand their Medicare coverage. On January 1, 2014, 26 states voluntarily expanded Medicaid eligibility. The rate of uninsured patients dropped to 36.3 percent in states that decided to expand their Medicare coverage and dropped to 23.9 percent in states that did not decide to expand their Medicare coverage.
According to the Colorado Hospital Association’s publication which reviewed 465 hospitals in 30 states, Medicaid charges increased for hospitals in expansion states for first quarter 2014 and the Medicaid share grows in expansion states relative to Medicare.
The publication also demonstrated that hospitals in expansion states recorded significant reductions in self-pay volumes and charity care, in other words, hospitals in expansion states seem to reflect a general decrease in the amount of uncompensated care they provide and a reduction in volume of uninsured patients. “There was a 30 percent drop in average charity care per hospital across expansion states, to $1.9 million from $2.8 million. Similarly, total self-pay charges declined 25 percent in expansion states, bringing its proportion of total charges down to 3.1 percent from 4.7 percent,” the report indicates.
Hospitals in states that chose not to expand their Medicare coverage may struggle to provide care to uninsured patients as the ACA comes into effect. In such states, hospitals will pay the full cost of the ACA’s funding mechanisms. According to the publication, the 24 states that did not expand their Medicaid are projected to cost their hospitals an estimated $15.9 billion in Medicaid revenue for 2016 and $167.8 billion for 2013–2022.
Between September 2013 and March 2014, 5.4 million nonelderly adults (ages 18 to 64) gained coverage and the rate of uninsured patients fell by 2.7 percent. In September 2014, the rate for uninsured nonelderly adults was estimated to be 12.4 percent for the nation, a drop of 5.3 percent since September 2013. A brief from the Office of the Assistant Secretary for Planning and Evaluation (ASPE) within the Department of Health and Human Services (DHS) indicated that hospital uncompensated care costs were estimated to be $5.7 billion lower in 2014 than they would have been without the decrease in the number of uninsured individuals.
