Medicaid, Uncompensated Care Burden of Safety-net Hospitals and the Threat of a Repeal of the Affordable Care Act

A Research Brief By: Stephanie Hughes


In the year 2008, one in seven Americans were left uninsured. Data collected from the National Health Interview Survey and the American Community Survey show that among those affected were low-income Americans, those ages 19-64, and people of color, more specifically, Blacks, Hispanics, and Native Americans. Due to high uninsured rates among the US population, health care providers continue to face billions of dollars in uncompensated care costs as they continue to rise.To address these concerns, on March 23, 2010, President Barack Obama signed the Patient Protection and Affordable Care Act into law with the hopes to ensure adequateStephanie Hughes
access to care, lower healthcare costs, and improve the health care delivery system. In regards to safety-net hospitals, these goals were addressed by expanding Medicaid services, providing tax and cost sharing subsidies, implementing individual and employer mandates and reforming the insurance marketplace.
Seven years since its passage, the Patient Protection and Affordable Care Act has insured over 20 million individuals. Although low-income populations and people of color continue to face disparities in health care, the Affordable Care Act's expansion of Medicaid coverage has been an influential force in alleviating the burden of health care costs on
safety-net hospitals and the vulnerable communities they serve by providing access, affordability, and quality.

Today, under the Affordable Care Act, a large amount of Americans who were previously uninsured are either eligible for Medicaid services, have greater access to preventive care and primary physicians, are eligible to receive employer sponsored plans, are covered as dependents, or have access to private insurance coverage. However, 27 million people in America remain uninsured. In contrast to its improvements for low-income Americans, some argue that the Affordable Care Act has neglected groups with special circumstances, in particular, middle-class households, and has not addressed the "substantial costs" of enrolling in a health insurance plan. Many individuals who are not covered are unable to afford employer sponsored plans, do not qualify
for Medicaid, are undocumented immigrants, or lack the proper knowledge of insurance coverage options. As a result, they turn to safety net hospitals as a last resort.

Accompanying these current challenges in health care are efforts to repeal and replace the Affordable Care Act. Under the proposed American Health Care Act, House Republicans have vowed to "repeal and replace" the Affordable Care Act with the hopes of stabilizing the insurance market by restructuring Medicaid and its funding structure, repealing the individual mandate, and eliminating hospital presumptive eligibility. Safety-net hospitals, known for providing care to individuals regardless of their ability to pay, are among those to be largely impacted if House and Senate Republicans repeal the Affordable Care Act and its Medicaid provisions. They are known to provide care to vulnerable populations, such as those uninsured, undocumented, or ineligible to receive Medicaid coverage. The "repeal and replace" of the Affordable Care Act is not only an issue for health care providers but an issue that will disproportionately affect safety-net hospitals, their patients, and communities.

According to the Congressional Budget Office, The House proposed American Health Care Act would cut federal Medicaid assistance by $834 billion by the year 2026. As a large population of Medicaid and tax credit recipients, shifts in Medicaid funding, caps to Medicaid expansion and changes in eligibility for subsidies will disproportionately affect non-elderly disabled, and low-income populations. Most importantly, these cuts to Medicaid will impact hospitals committed to serving vulnerable populations. If the American Health Care Act or similar provisions become law, the Congressional Budget Office estimates that an additional 24 million Americans will be uninsured by the year 2026, posing an even larger threat to safety-net hospitals. This estimated number of uninsured individuals by 2026, indicates a possible increase in the amount of uncompensated care costs that health providers will face.

Without the assistance from the federal government, it is projected that operating margins of safety-net hospitals will decline and ultimately impact financial stability. By repealing key provisions of the Affordable Care Act regarding Medicaid, strides taken towards lower costs, better access and improved quality will be negatively impacted. If the American Health Care Act or similar piece of legislation is implemented, populations who have gained Medicaid coverage due to the Affordable Care Act face uncertainties in continued coverage. Inadvertently, cuts to Medicaid will place an even larger burden on safety-net hospitals and will impact their ability to provide care to those in need due to uncompensated care costs.

The results of this analysis stress that federal funding for programs such as Medicaid expansion is an essential part of safety-net hospitals and their ability to serve vulnerable populations. The "repeal and replace" of the Affordable Care Act is not only an issue for safety-net hospitals but an issue that will affect all healthcare providers.