As Obamacare Takes Hold, Unpaid Hospital Bills Vanish
As hospital operators begin to report second period earnings — the sixth consecutive quarter of new revenue from once uninsured patients — the number and size of unpaid medical bills continues to fall thanks to the Affordable Care Act. The health law last year began to provide subsidized private health insurance coverage on public exchanges and expanded Medicaid for poor Americans. With increasing numbers signing up to private coverage and more states opting to expand Medicaid in the last 18 months, hospital companies are seeing expenses for charity and uncompensated care fall. A snapshot of this trend could be seen in last week’s earnings report of Universal Health Services (UHS), a large multi-state investor-owned operator of hospitals, which reported uncompensated care declined in the second quarter “as it has the last six quarters now,” Universal Health chief financial officer Steve Filton told analysts on the company’s second quarter earnings call.
Universal Health said its acute care hospitals have seen a “decrease in the aggregate of charity care, uninsured discounts and provision of doubtful accounts as a percentage of gross charges” this year through June 30 compared to the same period in 2014. Universal Health’s cost providing for so-called “doubtful accounts” dropped 17 percent to $274 million during the first half of the year from $331 million during the six-month period ended June 30, 2014.
Such trends, which helped Universal Health raise its earnings forecast for the rest of the year, should help the entire hospital industry, particularly as more states opt to expand Medicaid. Under the ACA, states have the option to expand Medicaid and 31 states including the District of Columbia have done so, according to the latest tally from the Kaiser Family Foundation. “We assume that the growth in our Medicaid patient base and utilization is related at least in large part to Medicaid expansion,” Filton told analysts. “We see it quite clearly most dramatically in those states, Nevada, California, the District of Columbia that have participated in Medicaid expansion.” Universal Health’s acute acre hospitals are located in California, Florida, Nevada, Oklahoma, South Carolina, Texas and the District of Columbia. An even clearer picture of U.S. hospital finances will emerge this week when Universal Health’s larger hospital operators report their earnings. Tenet Health (THC) and Community Health Systems (CYH) report Tuesday, HCA Holdings (HCA) reports on Wednesday.