Impact of Insurance Expansion on Hospital Uncompensated Care Costs in 2014. Summary

09/01/2014

Early hospital financial reporting and member surveys from hospital associations indicate that payor mix is shifting and uncompensated care is declining through second quarter 2014. Volumes of uninsured/self-pay admissions and ED visits (which are major drivers of uncompensated care) have fallen substantially, but particularly in Medicaid expansion states. Overall volumes of admissions from patients covered by Medicaid have increased, but predominantly in Medicaid expansion states. Projections suggest that UCC costs will be substantially lower in 2014 as a result of coverage expansion than they otherwise would have been: projections estimate a $5.7 billion reduction in hospital UCC costs in 2014 (16 percent of baseline uncompensated care spending). In Medicaid expansion states, hospitals are projected to experience reductions of $4.2 billion, representing 25 percent of these states’ baseline spending or 74 percent of the total savings nationally. In Medicaid non-expansion states, hospitals are projected to experience reductions of $1.5 billion, representing 9 percent of these states’ baseline spending, or 26 percent of the total savings nationally. This has important implications for hospitals’ future financial performance as public and private insurance continue to expand and as levels of federal reimbursement for UCC are reduced through cuts in DSH payments.

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