Hospitals are projected to save $5.7 billion in 2014 because of a drop in uncompensated care, in large part due to the expansion of Medicaid, according to an analysis by the Department of Health & Human Services.
Hospitals are also benefiting from the growth in private coverage obtained through the Affordable Care Act marketplaces. Overall, hospitals are expected to see a 16% drop in uncompensated care, compared with original projections for the year.
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Hospitals across America are expected to save $5.7 billion in 2014.
Medicaid, however, is the biggest driver in the savings for hospitals. In states that have expanded eligibility for Medicaid, hospitals could save as much as $4.2 billion, nearly three-quarters of the national savings projected. To date, 27 states plus the District of Columbia have expanded Medicaid, according to HHS.
The American Hospital Association seized on the HHS report as a chance to call on more states to expand their Medicaid eligibility under the ACA.
“The ACA is accomplishing its objective in some, but not all states,” said Marie Watteau, an AHA spokeswoman. “Today’s report offers a limited estimate of the level of uncompensated care. As the report states, it’s too early to know what the impact will be on a national level. Our members are counting on uncompensated care reductions and we continue to support the expansion of coverage.”
The decline in uncompensated care was anticipated with the increased insurance coverage under the ACA. As a result, the health law cuts hospital payments that have traditionally been used to offset uncompensated care costs. For instance, federal Medicaid Disproportionate Share Hospital (DSH) payments are scheduled to be cut $1.2 billion in fiscal year 2016 and a total of $17.6 billion by fiscal year 2020.
The HHS estimates are based in part on hospital cost reports from 2011 and 2012. The HHS defined uncompensated care as the combination of charity care to uninsured patients and costs from non-Medicare bad debt.
mschneider@frontlinemedcom.com
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