Unpaid ER charges could cost taxpayers
Lawmakers grapple with issue in debate over health care bill
If an uninsured patient shows up in the emergency room, who pays? The hospital? Taxpayers? The patient? Other patients?
The question is important as Republicans debate health care legislation that could result in more than 20 million fewer Americans having health insurance in 10 years. If that happens, some people will go without care. Others will show up at hospitals but won’t be able to pay their bills.
The year the Affordable Care Act passed, hospitals provided about $40 billion in “uncompensated care” — that is, care they were not paid for. That was nearly 6% of their total expenses in 2010.
A 1985 federal law requires emergency departments to stabilize and treat anyone entering their doors, regardless of their ability to pay.
That doesn’t mean the uninsured can get treated for any ailment.
“There’s lots of medical care we want to consume that’s not an emergency,” said health care economist Craig Garthwaite, an associate professor and director of the health care program at Northwestern University’s Kellogg School of Management.
It also doesn’t mean hospitals won’t try to bill someone without insurance.
And the bill they send will be higher than for an insured patient because there’s no carrier to negotiate lower prices.
As a result, the uninsured are more likely to be contacted by collection agencies as they face problems paying medical and non-medical bills. One study, published in 2016 by the National Bureau of Economic Research, found that someone who goes into a hospital without insurance doubles his or her chances of filing for bankruptcy over the next four years.
For the bills that go unpaid, hospitals can try to compensate by charging other patients more. That doesn’t happen as much as many people — including policymakers — think.
The authors of the ACA expected that increasing insurance coverage through Medicaid and subsidies for private insurance would lessen the cost-shifting that leads to higher insurance premiums.
Chief Justice John Roberts mentioned that benefit in the Supreme Court decision he authored in 2011 that upheld the law’s constitutionality. Researchers haven’t been able to document much of a cost shift.
Studying the effects of expanding Medicaid in Michigan — where more than 600,000 gained coverage — researchers at the University of Michigan found no evidence that the expansion affected insurance premiums. They did document that hospitals’ uncompensated care costs dropped dramatically — by nearly 50%.
Conversely, when Tennessee and Missouri had large-scale Medicaid cuts in 2005, the amount of care hospitals provided for free suddenly increased. In a study published in 2015 by the National Bureau of Economic Research, Garthwaite and his coauthors estimated every uninsured person costs hospitals $900 in uncompensated care costs each year.
“This is not a trivial thing for a hospital to deal with,” Garthwaite said.
Hospitals do get help with the unpaid bills — from taxpayers.
The majority of hospitals are non-profit and are exempt from federal, state and local taxes if they provide a community benefit, such as charitable care. Hospitals receive federal funding to offset some of the costs of treating the poor.
The year the Affordable Care Act passed, hospitals provided about $40 billion in “uncompensated care” — that is, care they were not paid for. That was nearly 6% of their total 2010 expenses.