Hospitals face O-Care uninsured funding gap


Hospitals are in a state of uncertainty as to how to cover the funding gap from uninsured patients as Medicaid and Medicare are expected to decrease payments for those bills.

A new report from the Urban Institute in the most recent Health Affairs journal notes Medicare payments to help compensate for the cost of treating the uninsured in hospitals are set to drop this year as more get coverage through the Affordable Care Act (ACA). Similar payments for Medicaid will begin to fall starting in 2016, which means the healthcare providers might have to take a larger financial hit.


“Providers incur significant costs in caring for the uninsured,” the report said. “However, the bulk of their costs are compensated through a web of complex funding streams that are financed largely with public dollars.”

If those funding streams begin to dry up, it could pose major financial challenges to providers, especially in states that have not adopted Medicaid expansion or where implementation of healthcare reform has been slow, according to the report.

In 2013, providers spent almost $85 billion to pay for the uninsured, but 65 percent of that was offset by the government. Under the ACA, Medicaid compensations for such costs are expected to be cut by 50 percent, and Medicare is expected to be cut by 28 percent.

The report concludes it is yet unclear how the reduced funding will affect healthcare providers who treat the uninsured, but said it is important for the government to monitor the situation.

“It will be essential for federal, state, and local policy makers, providers, and consumer advocates to monitor how these many changes affect the provision of uncompensated care for uninsured people — a group expected to number 30 million in 2017,” said the report.