Uncompensated Care to Drop $5.7B, says HHS

The US Department of Health and Human Services says hospitals’ uncompensated care costs will drop by $5.7 billion this year as a result of the Affordable Care Act.

The finding is included in a report issued this week by the agency.

The drop in uncompensated care is tied largely to the expansion of Medicaid in 27 states and the District of Columbia. Those states will reap 74% of those reduced costs, according to HHS, or about $4.2 billion. Another $1.5 billion will be saved in states that haven’t participated in Medicaid expansion.

“Hospitals have long been on the front lines of caring for the uninsured, who often cannot pay the full costs of their care,” said HHS Secretary Sylvia Burwell, in a press release. “Today’s news is good for families, businesses, and taxpayers alike.”

The report uses data from the American Hospital Association showing uncompensated care (UCC) cost hospitals between $46 billion and $51 billion in 2012 and an Urban Institute report suggesting uncompensated care in 2013 was $49 billion. The latter found each uninsured American implicitly received more than $1,000 in subsidized healthcare in 2013.

In addition, the HHS report cites studies in Arkansas and Colorado (both Medicaid expansion states), which found roughly 30% drops in uninsured admissions at hospitals from the first quarter of 2013 to the first quarter of 2014. Other studies have shown evidence of higher Medicaid admissions and fewer Emergency Department visits.

“Thus, UCC costs are likely declining among hospitals, particularly hospitals in Medicaid Expansion states,” the report says.

A May report by the Kaiser Family Foundation found hospitals bear the brunt of uncompensated care, shouldering 60% of the total uncompensated care costs in the US in 2013.

According to the Kaiser report, the federal government paid $32.8 billion in 2013 to offset uncompensated care, states paid an additional $19.8 billion. The private sector contributed $700 million to these cases.