News | October 13, 2014

New Report Projects $5.7B Drop in Hospitals’ Uncompensated Care Costs Because of the Affordable Care Act

Hospitals in states that have expanded Medicaid will receive about 74 percent of the total savings nationally

October 13, 2014 — A report released by the Department of Health and Human Services projects that hospitals will save $5.7 billion this year in uncompensated care costs because of the Affordable Care Act, with states that have expanded Medicaid seeing about 74 percent of the total savings nationally compared to states that have not expanded Medicaid.

For more than decade prior to the Affordable Care Act, the percentage of the American population that was uninsured had been growing steadily. But with the significant expansion of coverage under the health care law through the Health Insurance Marketplace and Medicaid, the uninsurance rate is at historic lows.  As a result, the volume of uncompensated care provided in hospitals and emergency departments has fallen substantially in the last year, particularly in Medicaid expansion states.

“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 M. Sylvia Burwell. “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.”

Projections from today’s report suggest that hospitals in states that have expanded Medicaid under the Affordable Care Act will see greater savings than hospitals in states that have not expanded Medicaid. Hospitals in states that have expanded Medicaid are projected to save up to $4.2 billion, which makes up about 74 percent of the total savings nationally this year. Hospitals in states that have opted not to expand Medicaid are projected to save up to $1.5 billion this year, and which is only 26 percent of the total savings nationally.

Medicaid expansion continues to help an unprecedented number of Americans access health coverage, many for the very first time.  According to a recent report, as of July, nearly 8 million additional individuals are now enrolled in Medicaid and the Children’s Health Insurance Program (CHIP), compared to before open enrollment in the Marketplace began in October 2013.

Because of the Affordable Care Act, states have new opportunities to expand Medicaid coverage to individuals with family incomes at or below 133 percent of the federal poverty level (generally $31,322 for a family of four in 2013). This expansion includes non-elderly adults without dependent children, who have not previously been eligible for Medicaid in most states. Twenty-eight states, including the District of Columbia have expanded Medicaid under the Affordable Care Act.

For more information: aspe.hhs.gov/health/reports/2014/UncompensatedCare/ib_UncompensatedCare.pdf, medicaid.gov/AffordableCareAct/Medicaid-Moving-Forward-2014/Medicaid-Moving-Forward-2014.html

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