Report: Hospitals' Uncompensated Care Costs Continue to Rise

January 6th, 2014

The American Hospitals Association issued a report on Monday that indicated the continuation of a troubling trend for hospitals and medical centers.

Uncompensated care costs continue to rise. In 2012 they rose to $45.9 billion, an 11.7 percent increase from the $41.1 billion figure in 2011 (source: ACA International).

While this trend will presumably continue to point upwards, the context of the numbers for the next couple years figures to be far different. ACA notes that the numbers provided here, which account for charity care and bad debt, do not include Medicare and Medicaid underpayments.

Any changes with these issues in the coming year will take place in a drastically different landscape. These factors will be affected by the implementation of the Affordable Care Act, something which will potentially stoke a drastic increase in uncompensated costs and bad debt.

As an example, the Houston Chronicle covered the concern about Medicare and Medicaid in an October 2013 report:

In the controversy over health care reform, medical professionals say, this is a potentially hidden time bomb. The 2010 federal law requires almost all Americans to have health coverage, and the Obama administration is hopeful an estimated 7 million people initially will buy it in the insurance marketplace.

Hospitals currently receive millions of dollars from Medicare and Medicaid each year to cover the care of uninsured and uninsured care. But that money is scheduled to drop dramatically under the theory that fewer people will use emergency rooms so the money can be allocated for preventative care.

Hospitals statewide face $28 billion in Medicare and Medicaid reductions by 2021, including $198 million to compensate for bad debt, according to the Texas Hospital Association.

But if ER visits don't go down, hospitals say it's cost prohibitive to enforce the patient dumping law and get less money from the government.

One of the principles behind the law known as Obamacare is that it will decrease expensive emergency room visits. Many are skeptical that it will play out that way, however, and even wonder if more people will go to the emergency room. If that's the case, it creates an "unsustainable business model," according to John Hawkins of the Texas Hospital Association.

There are still many unknowns, but it seems reasonable to project that bad debt for hospitals will continue to increase, even if this continuation occurs in a drastically different reality starting in 2014.