A recent American Hospital Association study reported that uncompensated care costs (UCC) in 2015 were the smallest share of hospital costs (4.2 percent of total expenses) in at least 25 years. The $35.7 billion in 2015 UCC was the lowest amount since 2007. (Uncompensated Hospital Care Cost Fact Sheet, American Hospital Association, December 2016)
The Obama administration estimated that the insurance coverage provisions of the Affordable Care Act (ACA) reduced hospital UCC by $7.4 billion in 2014. The coverage increase includes nearly 17 million additional enrollees in Medicaid or the Children’s Health Insurance Program since October 2013, and 8.8 million enrollees in the ACA marketplaces since open enrollment for 2017 started November 1. (“Uncompensated Care Falls to Lowest Level in 25 Years,” HFMA Weekly, January 13, 2017)
A recent report prepared for AHA estimated the ACA reduced hospital UCC among the newly insured by $14.6 billion in 2015. The annual UCC reduction was expected to reach $34.3 billion by 2026. (Estimating the Impact of Repealing the Affordable Care Act on Hospitals, Dobson/DaVanzo & Associates, December 6, 2016)
And a report from the Robert Wood Johnson Foundation (published by the Urban Institute) concluded ACA repeal—without replacement—would increase hospital UCC by nearly $25 billion in 2019. (The Impact on Health Care Providers of Partial ACA Repeal through Reconciliation, Robert Wood Johnson Foundation and the Urban Institute, January 2017)
The numbers are impressive, but tempered a bit by another AHA report noting that Medicare and Medicaid payments were $57.8 billion less than the costs of providing care to patients in 2015. The surge in losses appeared to be driven by Medicaid, where the shortfall increased 23 percent, from $13.2 billion in 2013 to $16.2 billion in 2015. Medicare underpayments increased 10 percent, to $41.6 billion. (Underpayment by Medicare and Medicaid Fact Sheet, American Hospital Association, December 2016)
Experts note that the ACA intended these shortfalls to be offset by the big drop in UCC and, in fact, the financial advantage was more concentrated in the 31 states that expanded Medicaid eligibility. UCC decreases in expansion states ($5.8 billion) greatly outstripped Medicaid losses ($0.9 billion). (“Uncompensated Care Falls to Lowest Level in 25 Years,” HFMA Weekly, January 13, 2017)
To read the various reports listed in this newsletter, please see below:
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