September 25, 2014—Preliminary data on health care reform’s Medicaid and insurance coverage expansions suggest some hospitals’ uncompensated care burden will lessen in 2014, the U.S. Department of Health and Human Services reports. [ms-protect-content id=”2799″]
Based on data from five large for-profit hospital chains and three state hospital associations, HHS estimates that hospital uncompensated care costs will be $5.7 billion lower this year than they otherwise would have been. It’s estimated that hospitals spent between $46 billion and $51 billion on uncompensated care in 2012, the government noted in the Sept. 24 report.
HHS projects that the vast bulk of the anticipated reduction — $4.2 billion – will be in the 25 states (plus the District of Columbia) that expanded Medicaid this year.
Earlier this month, the accounting firm PricewaterhouseCoopers said that for-profit health systems have been reporting better financial returns through the first half of 2014, “owed in large part to expanded Medicaid.”
Other research suggests this might not be the case for nonprofit hospitals. For example, Moody’s Investor Service reported in late August that the median operating margin for nonprofit hospitals fell to 2.0 percent in 2013, the lowest it’s been since the 2008-09 recession. The Affordable Care Act’s Medicaid expansion and individual mandate will have minimal impact on nonprofit hospitals’ 2014 margins, Moody’s added.
Public and nonprofit hospitals “still face high levels of uncompensated care and looming cuts to disproportionate share hospital funding – a problem of particular concern in states that have denied patients the same opportunity for Medicaid coverage so many others enjoy today,” said Bruce Siegel, President and CEO of the group America’s Essential Hospitals, in response to the HHS report.
“Even in states that have expanded Medicaid, our members continue to face the burden of Medicaid payment rates that fall well short of the true cost of care,” Siegel continued. “Similarly, coverage expansion through the health insurance marketplace only goes so far toward easing the strain of uncompensated care: Even with ACA premium subsidies, the cost of insurance may remain out of reach for many people of limited financial means.” [/ms-protect-content]