A report released last week by the U.S. Department of Health and Human Services projected that hospitals will save $5.7 billion in uncompensated care costs because of the Affordable Care Act.
The report, which is based on projections from large national hospital groups, concludes that states like Connecticut that expanded Medicaid eligibility will see greater savings compared to states that did not expand Medicaid.
“Hospitals have long been on the front lines of caring for the uninsured, who often cannot pay the full costs of their care,” HHS Secretary M. Sylvia Burwell said in a press release. “Today’s news is good for families, businesses, and taxpayers alike. It’s yet another example of how the Affordable Care Act is working in terms of affordability, access, and quality.”
U.S. Sen. Chris Murphy applauded the news.
“Today’s good news signals what we’ve known all along: the Affordable Care Act is working,” Murphy said in a statement. “The savings we’re seeing today are a direct result of the Affordable Care Act’s Medicaid expansion. Now when people they get sick, they have the peace of mind that they’re covered. This means huge savings for hospitals and consumers.”
But the Connecticut Hospital Association says there’s no hard data at the moment that shows Connecticut hospitals have seen a drop in uncompensated care, which the report defines as both bad debt, which hospitals expect to collect but are unable, and charity care, which they don’t expect to collect.
“Through the first nine months of FY 2014 (beginning Oct. 1, 2013), we have seen no noticeable change in demand for charity care,” Michele Sharp, a spokeswoman for the Connecticut Hospital Association, said.
The Office of Policy and Management, which also tracks the information, said it doesn’t have any hard data at the moment on the rate of uncompensated care in 2014, but like the Connecticut Hospital Association it anticipates it will decline.
“We anticipate that while expanded coverage should reduce hospitals’ uncompensated care, it won’t make up for the ACA cuts to Medicare funding and Connecticut taxes on hospitals that cost hospitals $254 million per year,” Sharp said.
She added that the cuts to Medicare, as part of the ACA, are not offset by the benefit of increased coverage because Connecticut had fewer uninsured patients to start, making the benefit of expanded coverage less than in other states, and leaving Connecticut hospitals with a significant funding gap.
The Disproportionate Share Hospital payments for Medicare totaled $11.4 billion in 2012 and are scheduled to be cut by just over 10 percent or $1.2 billion in fiscal year 2016 and $17.6 billion by 2020.
The HHS report examined five large for-profit hospital operators and associations based in three states that expanded Medicaid coverage.
The report found overall reductions in the volume of uninsured admissions to hospitals. The reduction ranged from 15 to 34 percent and in Medicaid expansion states it ranged between 48 and 72 percent. The report also found an increase in Medicaid patients being admitted to hospitals in Medicaid expansion states.
“These large percent increases in the volumes of Medicaid admissions are most likely the result of a shift in admissions of uninsured patients to admissions of patients covered by Medicaid, although some of the increase in Medicaid admissions could be the result of pent-up demand among the formerly uninsured,” the report found.
Murphy said the HHS report, which did not include any Connecticut- specific data, is proof the Affordable Care Act is working.
“This data is welcome news and shows that the Affordable Care Act is putting this country’s health care system back on track,” Murphy said.
Sharp points out that since Connecticut was an early adopter of Medicaid expansion there’s unlikely to be much of a change in charity care.
“Given how far Connecticut was ahead in Medicaid coverage, Connecticut hospitals are not expecting any significant changes in the demand for charity care,” Sharp said. “Over time, we’ll be able to better assess how health reform changes are playing out in Connecticut, but we anticipate that it is unlikely that our charity care will change significantly.”
Combined totals of bad debt and charity care, according to the Connecticut Hospital Association, were 2.58 percent in 2012, 2.34 percent in 2013, and 2.46 percent in the first nine months of 2014.