The Cost of Uncompensated Care
According to the American Hospital Association (AHA), uncompensated care is an overall measure of hospital care provided for which no payment was received from the patient or insurer. It is the sum of a hospital’s bad debt and the financial assistance it provides. Bad debt consists of services for which hospitals expected to receive payment but then didn’t. Financial assistance, on the other hand, consists of services that the hospital covered or absorbed because it neither received nor expected to receive payment from patients. In practice, however, hospitals often have difficulty in distinguishing bad debt from financial assistance.
These problems tend to only be exacerbated by the constantly changing nature of the American healthcare system and the overall high cost of private insurance coverage. Dealing with healthcare changes can be challenging for both health care providers and hospital budgets. Federal and state governments continue to roll out new regulations and policies or change old ones, especially as the ACA continues to evolve. These changes occur regularly, too, often after important elections when newly-seated lawmakers and administrations begin to make new decisions or overturn existing decisions about healthcare regulation.
These decisions can cause a lot of undue stress for hospitals. Many hospitals struggle in the first place to get their patients to pay for their care, especially long-term, no matter what kind of coverage they have (or lack thereof). As a matter of fact, because of these struggles, hospitals of all types have provided more than $702 billion in uncompensated care to their patients since 2000 (an average of $42.4 billion per year in the 2015-2017 time period). One of the main ways that healthcare organizations attempt to recover those costs is by finding innovative ways to care for their patients, though this is also challenging when budgets aren’t where they need to be.
However, when patients have access to healthcare, whether it be through the ACA, Medicare, Medicaid, charity care, or any other insurance plan, many hospitals’ uncompensated care costs drop significantly. These sources of payment can certainly help both hospitals and patients alike. Of course, not all uncompensated care costs come from patients’ ability or inability to pay. Some come from financial assistance offered by the hospitals themselves, and some come from insurance payers denying claims and payouts or setting. But in the long run, what matters is simply that hospitals need better ways to recover the funds that they are owed for the care they’ve provided.