In recent years hospital uncompensated care has been declining in the seven states studied here: California, Florida, Washington, Connecticut, Maryland, New Jersey, and New York. We document these declines and compare trends in uncompensated care in safety-net and other hospitals between the early 1980s and the early to mid-1990s. We discuss state responses to deal with the declines in hospital uncompensated care and their likely impact on the observed trends.

State trends in hospital uncompensated care

Objective
To estimate the effect of the first full year of the ACA Medicaid expansion on hospital provision of uncompensated care, with special attention paid to hospitals that treat a disproportionate share of low-income patients.

Data Sources
Data from a balanced panel of short-term, general, nonfederal, Medicare-certified hospitals were obtained from Medicare cost reports from 2011 to 2014.

Study Design/Study Setting
A series of difference-in-differences analyses were performed using hospitals in nonexpansion states as the control group. The dependent variable is hospital provision of uncompensated care.

Data Collection/Extraction Methods
The data were downloaded from the National Bureau of Economic Research website.

Principal Findings
The Medicaid expansion significantly reduced hospital provision of uncompensated care in 2014. In particular, within expansion states, DSH hospitals saw reductions beyond those experienced by non-DSH hospitals.

Conclusions
Evidence from this study indicates that the Medicaid expansion served to widen an already broad gap in provision of uncompensated care between hospitals in expansion and nonexpansion states. In addition, within expansion states, variation in uncompensated care between hospitals that treat a disproportionate share of low-income patients and those that do not was reduced, with the former experiencing significantly larger reductions. Lawmakers considering expanding Medicaid and those deciding appropriate levels of DSH payments should consider these findings.

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The ACA Medicaid Expansion, Disproportionate Share Hospitals, and Uncompensated Care

This chapter summarizes the many aspects of public policy for health care. I first consider government policy affecting individual behaviors. Government intervention to change individual actions such as smoking and drinking is frequently justified on externality grounds. External costs of smoking in particular are not very high relative to current taxes, however. More important quantitatively are the internal costs of smoking to the smoker. A recent literature has debated whether such internalities justify government action. I then turn to markets for medical care and health insurance. Virtually all governments provide health insurance for some part of the population. Governments face several fundamental choices in this provision. The first choice is between operating the medical system publicly or contracting for care from private providers. The make-or-buy decision is difficult in medical care because medical quality is not fully observable. Thus, private sector efficiency may come at the expense of quality. A second choice is in the degree of cost sharing. More generous insurance reduces the utility cost of illness but also leads to overconsumption of care when sick. Optimal insurance balances the marginal costs of risk bearing and moral hazard. In the USA, government policy has historically tilted towards more generous insurance, by excluding employer payments for health insurance from income taxation. The welfare loss from this subsidy has been a theme of much research. Finally, governments face issues of competition and selection. Sick people prefer more generous insurance than do healthy people. If insurers know who is sick and who is healthy, they will charge the sick more than the healthy. This differential pricing is a welfare loss, since it denies sick people the benefits of ex ante pooling of risk type. Even if insurers cannot separate sick from healthy, there are still losses: high costs of generous plans discourage people from enrolling in those plans. Generous plans also have incentives to reduce their generosity, to induce sick people to enroll elsewhere. Adverse selection is empirically very important. To date, public policies have not been able to offset it. Finally, I turn to the distributional aspects of medical care. Longstanding norms support at least basic medical care for everyone in society. But the generosity of health programs for the poor runs up against the possibility of crowding out private insurance coverage. Analysis from Medicaid program expansions shows that crowd-out does occur. Still, coverage expansions are worth the cost, given the health benefits they bring.

Chapter 31 Health care and the public sector

This paper summarizes the many aspects of public policy for health care. I first consider government policy affecting individual behaviors. Government intervention to change individual actions such as smoking and drinking is frequently justified on externality grounds. External costs of smoking in particular are not very high relative to current taxes, however. More important quantitatively are the internal costs of smoking to the smoker. A recent literature has debated whether such internalities justify government action. I then turn to markets for medical care and health insurance. Virtually all governments provide health insurance for some part of the population. Governments face several fundamental choices in this provision. The first choice is between operating the medical system publicly or contracting for care from private providers. The make-or-buy decision is difficult in medical care because medical quality is not fully observable. Thus, private sector efficiency may come at the expense of quality. A second choice is in the degree of cost sharing. More generous insurance reduces the utility cost of illness but also leads to overconsumption of care when sick. Optimal insurance balances the marginal costs of risk bearing and moral hazard. In the US, government policy has historically tilted towards more generous insurance, by excluding employer payments for health insurance from income taxation. The welfare loss from this subsidy has been a theme of much research. Finally, governments face issues of competition and selection. Sick people prefer more generous insurance than do healthy people. If insurers know who is sick and who is healthy, they will charge the sick more than the healthy. This differential pricing is welfare loss, since it denies sick people the benefits of ex ante pooling of risk type. Even if insurers cannot separate sick from healthy, there are still losses: high costs of generous plans discourage people from enrolling in those plans. Generous plans also have incentives to reduce their generosity, to induce sick people to enroll elsewhere. Adverse selection is empirically very important. To date, public policies have not been able to offset it. Finally, I turn to the distributional aspects of medical care. Longstanding norms support at least basic medical care for everyone in society. But the generosity of health programs for the poor runs up against the possibility of crowding out private insurance coverage. Analysis from Medicaid program expansions shows that crowdout does occur. Still, coverage expansions are worth the cost, given the health

Health Care and the Public Sector

This study has two objectives: (1) to examine the relationship between the involvement of community health centers (CHCs) in managed care and various center characteristics, including patient, provider, services, and financial characteristics, that are critically linked with the fulfillment of their mission and (2) to identify factors significantly associated with CHCs' involvement in managed care. Regarding the first objective, the study indicates that CHCs involved in managed care have more diversified sources of revenue and depend less on grant funding than other CHCs, and they serve a significantly smaller proportion of uninsured and homeless patients. Involvement in managed care is also associated with greater financial vulnerability, reflected in higher costs and net revenue deficits. Regarding the second objective, the study finds that CHCs have become involved in managed care largely in response to external market pressures, such as the prospect of reduced federal grant funding. Other significant factors include center size, location, and the percentage of users who are Medicaid patients.

/pdf/managed-care-and-community-health-centers-3b7i97dyz6.pdf

Managed care and community health centers.

Hospitals' bad debt and charity care increased by nearly 30% between 1987 and 1990. However, beginning in 1987, federal legislation expanded Medicaid eligibility to pregnant women and infants with family incomes up to 133% of the federal poverty level, and gave states the option to extend coverage up to 185% of poverty. These expansions likely reduced the need for free hospital care. Controlling for other factors associated with provision of uncompensated care, this analysis shows the Medicaid expansions reduced uncompensated care by roughly 5.4%. For hospitals with a significant commitment to maternity and infant care, the burdens of uncompensated care were 28.5% lower than they would have been without the expansions.

Moon M

Papers

Medicaid expansions for pregnant women and infants: easing hospitals' uncompensated care burdens?