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Uncompensated Care Still Causes Concerns for Providers

A major rating agency expects enrollment declines in the health exchange marketplaces created by the Affordable Care Act (ACA), thus increasing the level of uncompensated care for hospitals in 2018. Fitch Rating announced its prediction several days after the American Health Care Act (AHCA) was pulled from a planned March 24 vote in the U.S. House of Representatives.


The managing director at Fitch noted, “Everyone was in agreement—Democrats and Republicans—that the exchanges weren’t very healthy in 2017.” (“After AHCA, Uncompensated-Care Concerns Remain,” HFMA Weekly News, March 31, 2017)


Changes that affected the exchanges from 2016 to 2017 include:

  • Decrease in enrollment in the exchanges by about 500,000
  • Sharp increase in average premiums
  • Departure of some larger insurers from the marketplaces


The Fitch executive said in an interview that things are likely to be worse in 2018, “given that there is even more uncertainty now around the future of the ACA, what the [Trump] administration might do to defund portions of it or destabilize the exchanges even more than they already are. All that taken together is bad news for hospitals in that it probably means fewer exchange-covered lives.” (“After AHCA, Uncompensated-Care Concerns Remain,” HFMA Weekly News, March 31, 2017)


Uncertainty about future changes to the ACA as well as potential decisions by the administration has caused concern for hospitals and insurers, according to experts. For example,

  • CMS’s proposed rule changes to the ACA; e.g., new enrolment limits, network adequacy standards and timelines for qualified health plan certification
  • A decision by the administration on how it will handle subsidies that reduce out-of-pocket expenses for approximately 30 percent of ACA marketplace enrollees who are eligible for such subsidies based on income
  • Potential spillover in Medicaid-expansion states of people who drop marketplace plan coverage but who may earn too much to qualify for Medicaid coverage


Fitch had warned in an earlier note (March 16) that not-for-profit hospitals faced a “considerable” increase in uncompensated care under the AHCA. Those costs have been declining in recent years under the ACA. For example, uncompensated care for a group of the largest for-profit hospital companies has dropped by an average of 250 basis points since the start of the ACA’s insurance expansion, Fitch noted. (“After AHCA, Uncompensated-Care Concerns Remain,” HFMA Weekly News, March 31, 2017)




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