Affordable Care Act Reduces Costs for Hospitals

September 29, 2014

Email This Report

Source: NY Times

The Obama administration increased the pressure on states to expand Medicaid on Wednesday, citing new evidence that hospitals reap financial benefits and gain more paying customers when states broaden eligibility.

In states that have expanded Medicaid, the White House said, hospitals are seeing substantial reductions in “uncompensated care” as more patients have Medicaid coverage and fewer are uninsured.

Sylvia Mathews Burwell, the secretary of health and human services, and Jason Furman, the chairman of President Obama’s Council of Economic Advisers, said the data should persuade more states to expand Medicaid.

“Because of the Affordable Care Act,” Ms. Burwell said, “we project that hospitals will save $5.7 billion in uncompensated care costs this year. Hospitals in states that have expanded Medicaid are projected to save up to $4.2 billion of the total amount.”

Twenty-seven states have expanded Medicaid. Many of the others, which have balked until now, are likely to reconsider the issue when state legislatures convene next year.

White House officials said they wanted to work with Republican governors on Medicaid, as they did with Gov. Tom Corbett of Pennsylvania, a Republican. They reached an agreement with Mr. Corbett last month on a plan to expand Medicaid by using federal funds to buy private health insurance for about 500,000 low-income people.

The administration did not single out other states for special attention, but Florida, Georgia, North Carolina and Texas — all with Republican governors — are obvious candidates. Health policy experts estimate that 3.5 million people could gain coverage if those states expanded their Medicaid programs.

Uncompensated care represents the combined total of unpaid hospital bills and charity care provided to low-income patients.

Financial reports from investor-owned hospitals and surveys by several state hospital associations show that Medicaid expansion has reduced the number of patients who cannot pay their bills, Ms. Burwell said in issuing a report on trends in uncompensated care.

The study was part of a White House campaign to improve public perceptions of the Affordable Care Act before the midterm elections on Nov. 4 and the start of the next annual open enrollment period for people to buy health insurance, beginning on Nov. 15.

In the first enrollment period, which ended five months ago, the White House orchestrated an extensive national effort to enroll seven million people in private health plans through the federal and state insurance exchanges. The White House said it had signed up eight million people, of whom 7.3 million have paid their premiums and still have coverage.

Ms. Burwell declined Wednesday to set a numerical goal for the new open enrollment season. She said she was considering whether to do so.

The Congressional Budget Office has estimated that enrollment through the exchanges will climb to a total of 13 million next year and 24 million in 2016.

Charles N. Kahn III, the president of the Federation of American Hospitals, which represents investor-owned companies, said, “The increased payments for previously uncompensated care are a plus for hospitals.” But he added: “You have to remember the context. We are living with heavy cuts in Medicare, which were put in place by the Affordable Care Act.”

Federal officials analyzed financial reports from hospital operators like HCA Holdings and Tenet Healthcare, as well as data collected from two dozen states by the Colorado Hospital Association. In states that expanded Medicaid, they said, hospitals reported increases in Medicaid admissions ranging from 17 percent to 32 percent, with no evidence of significant increases in other states.

Nine states led by Republican governors have decided to expand Medicaid. But Gov. Bobby Jindal of Louisiana, the vice chairman of the Republican Governors Association, has opposed expansion, saying it would move tens of thousands of people in his state from private insurance onto a government program.

Source Link

Filed Under: