Weakening the Affordable Care Act will boost hospitals’ financial burden

W

hile the Trump administration and the Republican-led Congress failed to repeal and replace the Affordable Care Act, a number of ACA-weakening strategies put forward by the administration are already underway. These include inadequate enforcement of the individual mandate, imposition of work requirements on Medicaid recipients, and failure to promote enrollment through advertising and outreach. An unintended consequence of these strategies is likely to be an increase in the amount of uncompensated care provided by America’s hospitals.

The American Hospital Association defines uncompensated care as all hospital care provided for which no payment is received. This includes bad debt (services for which a hospital anticipated payment but did not receive it) and financial assistance or free care (care or services that hospitals provided but did not expect to receive payment). It does not include shortfalls in payments from Medicaid or Medicare, which also contribute to financial challenges for hospitals.

In 2013, $84.9 billion in uncompensated care was provided to individuals who could not pay all or part of their bills. Of all uncompensated medical expenses, the majority (60 percent) occur in hospitals. But there is no “free lunch.” Whenever possible, hospitals attempt to shift the costs associated with free care and bad debt onto other payers, like commercial insurers. Like pressing on one side of a balloon only to see another side bulge out, shifting the costs of uncompensated care eventually results in higher premiums for everyone else. Of additional concern, hospitals that care for the poor are less able to shift costs, since they have far less revenue from commercial payers, resulting in uneven and possibly unsustainable financial burdens.

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