Study: ACA cut hospital charity care, stabilized bad debt expenses

An analysis of CMS data by the Pittsburgh Post-Gazette said hospitals spent less on charity care and unrecoverable debt once the Affordable Care Act was implemented.

Using data from more than 4,500 acute care hospitals between 2011 and 2014, the Post-Gazette found charity care for treating uninsured or underinsured patients fell by 13 percent between 2013 and 2014—the first year of open enrollment on the ACA exchanges. The decrease came after three years of steady increases in 2011, 2012 and 2013.

The decline in charity care spending was more pronounced among non-profit hospitals (an average savings of $700,000 per hospital) than for-profit (average savings of $365,000).

Hospital bad debt, defined as an unpaid bill by a patient who didn’t qualify or apply for charity care, was flat between 2013 and 2014 at 3.4 percent of a hospital’s net revenue, after increasing from 2011 to 2013.

The ACA appears to be the reason for the reduction in charity care and stabilization in bad debt, as the Post-Gazette said those changes weren’t seen with hospitals in states who chose not to expand Medicaid. In those states, charity care spending dropped only slightly, and bad debt expenses increased from 2013.

Nancy De Lew, associate deputy assistant secretary for health policy for HHS, said the drops had been predicted, adding “we may continue to see decreases in uncompensated care as the uninsured rate goes down.”

Groups who have been opposed to the ACA, such as the Heritage Foundation and Americans for Prosperity, didn’t dispute the findings, but questioned whether the savings in these areas could offset hospitals’ rising costs from covering additional Medicaid patients.