$85 Billion in Uncompensated Care Provided

When the millions of uninsured Americans use healthcare services they cost the industry $85 billion. Hospitals take the brunt of the uncompensated care.

Despite the decrease in the uninsured rate, there will remain millions of Americans without health insurance using healthcare services. A new study in Health Affairs has estimated the hefty cost of providing uncompensated care.

Hospitals accounted for 59.5% of the uncompensated care delivered in 2013, while 26.4% came from publically supported community providers and the remaining 14% came from office-based physicians.

Teresa Coughlin of the Urban Institute and colleagues estimate that up to $84.9 billion in uncompensated care was provided in 2013, but at least 65% of the costs were offset by government payments. According to the report, Medicaid provided $13.5 billion and Medicare provided $8 billion.

The remaining uncompensated care was covered by physicians’ in-kind contributions ($10.5 billion) and private finance ($21.8 billion). According to the researchers, whether or not hospitals shift uncompensated costs to private insurers can be based on a number of factors. In some markets, the hospital could absorb the costs as a loss and implement cost-cutting measures. However, elsewhere, the care is paid for by a health plan, which passes the costs on to subscribers.

Federal payments to hospitals for care to the uninsured are scheduled for reductions, however. Medicare will be reduced starting in FY 2014 and Medicaid in FY 2016. These payment reductions are because the government expects a reduction in uncompensated care as there will be fewer uninsured patients under the Affordable Care Act.

“Anticipating fewer uninsured people and lower levels of uncompensated care, the Affordable Care Act reduces certain Medicare and Medicaid payments,” the authors wrote. “Such cuts in government funding of uncompensated care could pose challenges to some providers, particularly in states that have not adopted the Medicaid expansion or where implementation of health care reform is proceeding slowly.”

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