CT hospitals say Obamacare hasn’t cut uncompensated care

A recent federal report says hospitals saw a major decrease in uncompensated care after the rollout of key provisions of the federal health law this year. But so far, that’s not what Connecticut hospitals are experiencing, according to their association.

From January to June of this year, after the major coverage expansion provisions of Obamacare took effect, uncompensated care provided by Connecticut hospitals represented 2.4 percent of total patient revenue, according to the Connecticut Hospital Association.

That’s up slightly from 2.34 percent in the 2013 fiscal year, and down somewhat from 2.58 percent in the 2012 fiscal year. Uncompensated care refers to both bad debt — when patients can’t pay their portion of the bill — and charity care provided with no expectation of payment.

“There clearly can be changes in [insurance] enrollment, but in the grand scheme of things, we’re not seeing that that change in enrollment is having a material impact on the burden that hospitals are having to manage dealing with those seeking out charity care services and those unable to pay for their share of coverage,” said Stephen A. Frayne, the hospital association’s senior vice president for health policy.

The hospital association figures offer a different picture than the report released last week by the U.S. Department of Health and Human Services, which projected that hospitals’ uncompensated care costs nationwide would be down by $5.7 billion, or 16 percent, in 2014, with most of the reduction occurring in states that, like Connecticut, expanded Medicaid as part of Obamacare.

What accounts for the difference?

For one thing, the two sets of figures aren’t entirely parallel. While the federal report used total amounts of uncompensated care, the hospital association reported uncompensated care charges as a percentage of patient revenue and did not provide the matching dollar values.

But there are also more substantive reasons why the experience in Connecticut might differ from the national picture, at least for now.

Why Connecticut is different

Even before the major provisions of Obamacare took effect this year, Connecticut had a lower uninsured rate than many states, and the uninsured represented an even smaller share of hospital patients.

While the state’s uninsured rate was about 9 percent in 2012 and 2013, according to Census figures, only about 2 percent of hospital patients were uninsured in the 2012 fiscal year, according to the state Office of Health Care Access.

Nearly two-thirds of the uncompensated care charges Connecticut hospitals recorded in the 2013 fiscal year were for bad debts, while about 36 percent represented care the hospitals delivered with no expectation of payment, according to a report by the state Office of Health Care Access.

Connecticut’s Medicaid program has long been available to a wider group of people than in other states, and the state began expanding the program as part of Obamacare earlier than any other state, in mid-2010. That meant that there was likely to be a smaller drop in the number of uninsured state residents this year than in many other states that only began expanding Medicaid or offering discounted insurance Jan. 1.

Even so, more than 250,000 people signed up for Medicaid or private insurance through Connecticut’s health insurance exchange, which launched last fall, and a survey of members indicated that 54 percent were previously uninsured.

But hospital officials say it’s too soon to tell how that will affect the use of hospital services.

It’s long been conventional wisdom that the uninsured crowded emergency rooms, but research has shown that that’s largely not the case. Instead, people with Medicaid have been most likely to use the emergency room, possibly because they have a harder time finding doctors to treat them and because Medicaid has historically covered a sicker population than private insurance plans.

David Bittner, senior vice president of finance at St. Francis Hospital and Medical Center in Hartford, said any decrease in the number of uninsured patients is likely to be offset by two things: More patients have Medicaid, which generally pays hospitals less than the cost of care. And some of those who bought private health plans through the exchange previously had other private coverage that paid higher rates than the exchange plans.

“We weren’t expecting any type of windfall” from the health law, Bittner said. The situation might be different, he said, if the state had a higher rate of uninsured residents before Obamacare.

In a report released this month, the state Office of Health Care Access predicted that hospitals’ uncompensated care costs “should” decrease because of the coverage expansion — eventually.

“A significant reduction in the overall costs, however, may take some time and may not decrease uniformly at individual hospitals,” it said. “Hospitals in areas with a high uninsured population may not see significant reductions in uncompensated care costs in the immediate future.”

Other funding cuts

And hospital officials say any increase in insured patients will likely be offset by cuts to Medicare funding and a loss of state aid.

The federal government is reducing Medicare payments to hospitals to help pay for the health law’s coverage expansion, and the Connecticut Hospital Association says that translates to a cut of about $2.1 billion over 10 years.

Separately, there have been significant changes to state payments to hospitals in the past four years.

In 2011, the state began taxing hospitals and redistributing the money back to hospitals, which enabled Connecticut to receive federal funds. But in subsequent years, the state reduced the amount hospitals got back. Frayne said hospitals now pay $350 million a year in taxes and receive about $95 million back.

Gov. Dannel P. Malloy’s administration has argued that hospitals will benefit because Obamacare will lead to more insured patients, and that the total amount of state money paid to hospitals has been increasing significantly.

But hospital officials say that although the state is paying more because more patients have Medicaid, the hospitals are incurring costs to earn that additional revenue and still lose money on most care covered by Medicaid.

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