Hospitals will save $5.7 billion in uncompensated care costs this year, thanks to the fact that people are gaining insurance under Obamacare and are now able to pay their bills, according to a new report from the Department of Health and Human Services. Compared to what hospitals would have likely needed to pay without the law’s coverage expansion, that represents a 16 percent drop in costs.
The report finds that there are now fewer uninsured people going to the emergency room and being admitted to the hospital — which translates into big savings for hospitals. 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.
The Obama administration’s findings echo previous evidence that the health law is contributing to a drop in uninsured patients visiting the ER, and ultimately providing a boost to hospitals’ bottom lines.
But those gains aren’t being shared equally across the country. According to HHS, three-fourths of the total uncompensated care savings — $4.2 billion — comes from the states that have agreed to expand their Medicaid programs under Obamacare, an optional provision of the law that seeks to extend coverage to additional poor Americans with incomes up to 138 percent of the federal poverty line.
The new findings will likely be used to press Republican governors to accept the expansion. HHS Secretary Sylvia Burwell told reporters that “we’re now at a phase where we’re actually going to start seeing the benefits” of the policy, and she believes that will be persuasive to the lawmakers who continue to hold out.
While nine GOP leaders have agreed to move forward with expansion, 21 states are currently refusing, despite the emerging financial benefits. Critics of the expansion typically say that it’s simply too expensive for their state to afford; in reality, however, more than 95 percent of the cost is covered by the federal government, according to the Congressional Budget Office. Another recent report found that the states refusing to accept the expansion will forfeit $400 billion in federal funds over the next decade.
The hospitals that serve a disproportionately large portion of low-income and uninsured patients are especially hard hit by states’ refusal to expand their Medicaid programs. Many of them can’t afford to stay operating without the funding from the expansion, including the financial boon from serving more patients who have insurance. That’s forcing rural hospitals in states like Georgia, Tennessee, Virginia, and North Carolina to close, leaving impoverished residents there with even fewer resources.
According to the latest estimates, about 8 million people have gained public health insurance under Obamacare, and enrollment in Medicaid and CHIP has increased by nearly 14 percent since the law’s enrollment period began. Experts say that number could increase by 3.5 million additional people if GOP states agreed to expand their Medicaid programs. Until then, however, those low-income people are locked out of affordable coverage altogether — something that has led activists to brand the push for expansion as a moral issue.