While fierce debate continues to envelop much of the Affordable Care Act, financial data for many of the nation’s health systems reveal one clear fact: the optional Medicaid expansion has resulted in hospital haves and have nots.
An analysis by PwC’s Health Research Institute (HRI) of newly released earnings and patient volume data shows a clear financial split between healthcare providers operating in states that expanded Medicaid and those that have not. The law as written would have provided Medicaid coverage to every American earning less than 138% of the federal poverty level ($16,105 for an individual). But a June 2012 Supreme Court ruling made the expansion optional for states, creating a patchwork of coverage.
Health systems and physician groups delivering care in the 26 states and the District of Columbia that have embraced the federally-funded expansion have reported a significant rise in patient volumes and paying consumers and a measureable reduction in uncompensated care levels.
This year alone LifePoint Hospitals has seen a 30.3% reduction in its uninsured and charity care patients, according to filings with the Securities and Exchange Commission. Tenet Healthcare, which operates in five Medicaid expansion states, saw uninsured and charity care admissions decline by 46% in the expansion states, coupled with a 20.5% increase in Medicaid inpatient admissions in those same states, according to an HRI analysis which will be released next week.
In all, HRI analyzed financial data from the nation’s five largest for-profit health systems—HCA Holdings, LifePoint, Tenet, Community Health Systems and Universal Health Services, representing 538 hospitals in 35 states. Our team also reviewed data from several mid-sized hospitals, government reportsand industry surveys.
As Chip Kahn, president of the Federation of American Hospitals told HRI: “It’s logical…the expansion has had a material effect on those areas.”
Medicaid admissions in expansion states increased by a range of 10.4% to 32% in the country’s three largest health systems since the start of the year. Uninsured or “self-pay” admissions, which typically represent a large share of uncompensated care, fell about 47% during the first half of this year for the same three systems.
Tennessee-based Community Health executives, put the impact of the ACA’s coverage expansion into dollars, reporting that the surge in paying customers accounted for about $45 million in revenue so far this year and they expect it to be an additional $40 million by the end of 2014.
The expansion had a similar impact on doctors. Primary care physicians, surgeons and other specialists in expansion states saw more Medicaid patients during the first three months of 2014 than they did in the previous year, according to a report this summer by Robert Wood Johnson Foundation and AthenaHealth.
Some governors have resisted the expansion, saying they worry about the long-term cost of Medicaid to the state. But in the short-term at least, the ACA provides 90-100% federal funding for newly-eligible Medicaid recipients.
In Arkansas, where low-income residents can use Medicaid dollars to shop for insurance on its exchange, hospitals report a drop in emergency room visits (2%) and a major decline in uninsured patients (30%), according to Arkansas Hospital Association vice president Jodiane Tritt.
As she told HRI’s Matt DoBias: “That means our emergency rooms are not getting overcrowded, doctors are finally getting paid—particularly in rural Arkansas for seeing patients who now have a payment source they never had before—and the folks that really do need inpatient care are coming to us at the appropriate time, and they have a paying source.”