Thanks To Obamacare, Hospitals Saved More Than $7 Billion Last Year

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As the health care reform law marks its fifth anniversary, federal officials are touting its cost saving provisions that have had a positive effect on hospitals’ bottom lines.

According to a new report from the Department of Health and Human Services (HHS), hospitals saved at least $7.4 billion last year, thanks in large part to reforms under Obamacare. The savings reflect a reduction in the so-called “uncompensated care” that hospitals provide to uninsured Americans, and are even greater than HHS officials predicted they would be at the beginning of this year.

Since people without insurance typically don’t have any means to cover their medical bills, the cost of their treatment ends up falling on the hospital itself. Therefore, as more people gain coverage, it become less expensive for hospitals to care for their patients. More than 16 million previously uninsured Americans have gotten covered under Obamacare, contributing to the biggest drop in the national uninsurance rate over the past four decades.

Nationwide, hospitals’ uncompensated care costs were about $27.3 billion in 2014 — which sounds like a lot. But, according to the new HHS report, that number would have been much higher if the nation’s uninsured rate had remained at the same level as it was in 2013. If more people hadn’t gained insurance, national uncompensated care costs would have soared to an estimated $34.7 billion.

The savings have been most pronounced in the states that agreed to accept Obamacare’s optional Medicaid expansion, which seeks to extend public insurance to additional low-income people. Nearly 70 percent of the savings documented in the HHS report — a total of $5 billion — occurred in the 29 states that have expanded Medicaid. And, if every state had agreed to add more people to their Medicaid rolls, their hospitals could have saved an extra $1.4 billion.

The latest HHS report comes on the heels of several outside studies that have recently confirmed that pro-expansion states are saving money. In addition to a reduction in uncompensated costs, states that are implementing this particular Obamacare provision are also benefiting from the additional federal funding allocated toward Medicaid expansion. Plus, those states are creating more jobs in the health care sector to keep up with the demand from newly insured people.

Federal officials are attempting to use this evidence to convince GOP-controlled states to stop resisting Medicaid expansion, a political stance that is preventing millions of low-income people from accessing affordable insurance.

On Monday, HHS Secretary Sylvia Burwell unveiled the results of the new report in Virginia, where the state legislature has repeatedly blocked Gov. Terry McAuliffe’s (D) efforts to move forward with expanding the program. “In addition to the moral obligation we have, expansion of Medicaid in Virginia will be a huge economic driver and job creator,” McAuliffe said at that event.