Because it expands health insurance coverage, one of the key effects of the recently passed health reform bill is that it will decrease the amount of compensated care. According to an Urban Institute study:
“…the cost of uncompensated care will fall from $62.1 billion in 2009 to $46.6 billion in 2019 under the Senate bill, and to $36.5 billion in 2019 with the House bill…Without reform, the cost of uncompensated care will increase to between $107 and $141 billion in 2019, depending on growth in the economy and health care costs.”
Who currently pays for uncompensated care? This chart provides a breakdown. Surprisingly, physician’s in-kind free treatment makes up only 14% of uncompensated care. On the other hand, Medicare and Medicaid fund the largest share of uncompensated care. The reason for this is that Medicare has a disproportionate share hospital (DSH) payment program indirect medical education payments and Medicaid also has a DSH program as well as supplemental provider payments programs. The authors count these programs as payment for uncompensated care. The DSH payment system doesn’t make much sense to me. If, Medicare or Medicaid payments are too low, why not raise the reimbursement rates rather than give lump sum handouts to hospitals in the form of a DSH payment.
State and local government also pay for a large share of uncompensated care. In California, county-financed clinics are the last refuge for those without insurance, especially for undocumented immigrants. According to the study, state and local governments pay for about 18% of unfunded care.
- John Holohan and Bowen Garrett (2010) “The Cost of Uncompensated Care with and without Health Reform” Urban Institute, Timely Analysis of Immediate Health Policy Issues, March 2010.