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Some Public Hospitals Win, Others Lose With Affordable Care Act

Hospitals in Medicaid expansion states cut unreimbursed costs of care by 40%

A year and a half after the Patient Protection and Affordable Care Act (PPACA) brought widespread reforms to the U.S. health care system, Chicago’s Cook County Health & Hospitals System has made its first profit in 180 years.

Seven hundred miles south, the fortunes of Atlanta’s primary public hospital, Grady Health System, haven’t improved, and it remains as dependent as ever on philanthropy and county funding to stay afloat.

The disparity between the two “safety net” hospitals, both of which serve a disproportionate share of their communities’ poorest patients, illustrates a growing divide nationwide, according to a Reuters report.

In states like Illinois that have opted to accept federal money to expand Medicaid, some large, public hospitals are finding themselves on solid financial footing for the first time in decades, and formerly uninsured patients are now getting regular care. But in states that did not expand Medicaid, primarily ones with conservative electorates opposed to the PPACA, including Georgia, the effect of the Act on public hospitals has been negligible.

Since the PPACA’s first open enrollment in 2013, the number of Americans covered under Medicaid has risen by 21% to 71.1 million.

Nonprofit hospitals in the 30 states that expanded Medicaid reported on average 13% less bad debt from unpaid bills last year, according to Moody’s Investors Service. In contrast, such hospitals in non-expansion states saw bad debt increase through much of the year.

Hospitals in Medicaid expansion states, according to the Kaiser Family Foundation, reported an average 32% decrease in uninsured patients and a 40% cut in unreimbursed costs of care for patients without the ability to pay, known in the industry as charity care costs. In non-expansion states, the number of uninsured patients declined by 4.4%, and charity care costs dropped by 6.2%.

New recipients of Medicaid benefited, too. After 1 year, adults who gained coverage were 55% more likely to have their own doctor than were those who did not, Kaiser found. Medicaid also increased the likelihood of receiving preventive care, such as mammograms and cholesterol checks.

Both Cook County and Grady are safety-net hospitals based in urban counties where the poverty level is slightly higher than the national average, and both have handled high numbers of uninsured clients in recent years: about half of the patients at Cook and nearly a third at Grady.

Since the PPACA took effect, the numbers at the Georgia hospital have remained about the same. But things have changed dramatically at the Illinois hospital, in large part because of the area’s enrollment of approximately 170,000 of an estimated 330,000 people eligible for expanded Medicaid.

Within 2 years, the percent of uninsured patients at the hospital had dropped from more than a half to about a third, almost entirely driven by increased Medicaid coverage, hospital data show. And for the first time in the hospital’s history, most of the patients it treated had coverage.

A third of the new Medicaid enrollees treated at Cook County were patients new to the system. And, hospital administrators say, those with chronic diseases, such as diabetes, who used to be frequent emergency room visitors, now have personal physicians to help them manage their conditions.

In the fiscal year ending in November 2014, uncompensated charity care dropped to $342 million from $500 million the year before. Funding from Medicaid nearly doubled the health system’s operating revenues, a major reason that, after ending 2013 with a net loss of $67.6 million, Cook County Health finished its most recent fiscal year in the black.

At Grady Health System in Atlanta, meanwhile, the number of patients covered by insurance increased by less than 2% last year. Bad debt from unpaid bills has continued to climb, to $396 million from $269 million in 2013. And the percentage of patients covered by Medicaid didn’t change.

Georgia is one of 20 states, disproportionately clustered in the South, that didn’t expand Medicaid. About 89% of those left out of the new Medicaid coverage –– because their states chose not to expand the program –– live in the South, the Kaiser Family Foundation found.

Grady has a better financial outlook than many hospitals in states, but it remains reliant on $57 million in tax support from local counties. Without the local funding, Grady would be running a deficit.

“From a global perspective, it seems like the [PP]ACA is working,” said Kevin Holloran, senior director at Standard & Poor’s. But in non-expansion states, like Georgia, “it’s really a neutral. It’s just the status quo.”

Source: Reuters; July 23, 2015.

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