Obama’s new health law is going to have an impact on those individuals who rely on free healthcare through hospitals. However, the positive here is that hospitals will be saving a great deal of money.
The Affordable Care Act will lead to $5.7 billion in savings in uncompensated hospital care costs this year, the Obama administration said Wednesday, reducing one of the biggest financial challenges hospitals face.
The states that expanded Medicaid so all low-income residents would have medical coverage will reap about 74% of the savings nationally, Department of Health and Human Services Secretary Sylvia Burwell said.
The number of people who have signed up through the state exchanges has grown quite a bit over the past year or so. There used to be a lot of worry around the news that people were not going to sign up. That does not seem to be the case.
Nearly 8 million additional individuals are now enrolled in Medicaid and the Children’s Health Insurance Program (CHIP), compared with the number before open enrollment in the ACA Marketplace began in October 2013. Pennsylvania and New Hampshire recently joined the 25 states and the District of Columbia to expand coverage.
What is the ACA?
One of the primary reasons that hospitals were excited for the ACA is the possibility for reimbursement for services they provide. Services provided for free are referred to as “charity care”. This is something that hospitals in under served areas deal with every day.
The savings from Medicaid expansion occur because hospitals are reimbursed by Medicaid for patients they used to have to treat for free. This uncompensated care includes charity care, which hospitals never expected to be paid for, and bad debt, which is incurred when patients can’t or won’t pay their bills.
Burwell’s announcement was paired with one by Jason Furman, chairman of the Council of Economic Advisers, about the reductions in health care spending increases that the administration says are attributable to the health law. The three years after the ACA took effect in 2010 had the slowest growth in real per capita national health spending on record, Furman said.
Not all states are all that excited about expanding their Medicaid coverage. Some governors have refused to expand coverage to their citizens, and many times this is due to cost constraints in a tight budget economy.
ut some health care experts, including Charles Kahn, CEO of the Federation of American Hospitals, say the new numbers may not be enough to sway governors opposed to Medicaid expansion.
“I think it shows that the act can work for low-income Americans” who are now “seeking the care they need, which is a good thing for them and a good thing for the hospitals, ” says Kahn.