September 29, 2015
Hospitals see significant drop in need for charity care in 2014
Minnesota hospitals saw a dramatic drop of 6.3 percent in uncompensated care - care for which they don’t receive payment - in 2014, the year that major aspects of the Affordable Care Act went into effect.
The Minnesota Department of Health (MDH) released an issue brief on Tuesday describing the changes in uncompensated care between 2013 and 2014, the first year in which Minnesota implemented many of the most significant coverage provisions of the Affordable Care Act, including the establishment of MNsure. These changes resulted in Minnesota’s uninsured rate falling to an all-time low of 5.9 percent.
Uncompensated care has two components, charity care and bad debt. While charity care is care that hospitals provide without expecting payment, bad debt is payment that hospitals expect but do not receive.
MDH found that hospitals saw a 22.4 percent ($34.6 million) decline in charity care, which is only the second time since 2001 that charity care fell in Minnesota. Charity care fell for patients with insurance and patients without insurance. However, there was a greater decline in charity care for the uninsured (down 24.6 percent) compared to insured patients (down 17.8 percent).
Overall uncompensated care decreased because the drop in charity care was greater than the ongoing trend of increased bad debt among hospitals. However, in 2014, hospitals saw bad debt increase 9.3 percent ($14.9 million) to $174.2 million. Bad debt has been steadily trending upward in Minnesota with few interruptions. The increase in bad debt has occurred as health care costs continue to rise and employers and insurers shift more of the costs to patients through higher deductibles and copays.
“We are pleased that more Minnesotans now have the benefits of health coverage when they go to the hospital,” said Minnesota Commissioner of Health Dr. Ed Ehlinger. “However, the rising cost of health care continues to pose a threat to access to care. Without addressing health care costs through additional reforms and prevention efforts, even those patients with insurance increasingly are struggling with medical bills and unpaid care or bad debt.”
Hennepin County Medical Center was the largest provider of uncompensated care followed by the two Mayo hospitals in Olmstead County.
“What the data seem to show,” said Stefan Gildemeister, director of the MDH Health Economics Program, “is that hospitals were able to benefit from a decrease in the need for charity care as tens of thousands of Minnesotans were able to get health insurance because of MNsure and the Affordable Care Act.”
The issue brief is available at the MDH Health Economics Program website.