Obamacare Facts

Unpaid Medical Bills Reduced By ACA

According to HHS the expansion of Medicaid and the increased coverage under the ACA has led to a reduction in unpaid medical bills saving taxpayers and hospitals billions.

Highlights from the factsheets can be found below (for a list of citations see page 3 of this PDF):

Unpaid Hospital Bill Reduction Under the ACA

The Commonwealth Fund studied the relationship between the ACA’s Medicaid Expansion and hospital’s uncompensated care. Their study found that Medicaid expansion reduced the cost of uncompensated care in expansion state hospitals by $6.2 million. Only 0.3 to 0.4 percentage points were saved in non-expansion states.

Based on estimated coverage gains in 2014, ASPE estimates that hospital uncompensated care costs were $7.4 billion lower in 2014 than they would have been had coverage remained at its 2013 level, at $27.3 billion versus $34.7 billion. This represents a 21 percent reduction in uncompensated care spending.

• $5.0 billion of this reduction comes from the 28 Medicaid expansion states plus Washington DC, representing a 26% reduction in uncompensated care spending and 68% of total savings. $2.4 billion comes from the 22 Medicaid non-expansion states, representing a 16% reduction in uncompensated care spending and 32% of total savings.

• If non-expansion states had proportionately as large increases in Medicaid coverage as did expansion states, their uncompensated care costs would have declined by an additional $1.4 billion.

Positive Effects of Medicaid Expansion on People

Medicaid is the third largest poverty-reducing program in the country and the second-largest program in reducing the rate of Americans in extreme poverty (<50% of the federal poverty level).

• In the Oregon Medicaid experiment, researchers found a 25% decline in the probability of having an unpaid medical bill sent to a collection agency and almost eliminated catastrophic out-of-pocket medical costs.

• Pre-ACA Medicaid expansions have been associated with reductions in bankruptcy rates.

Positive Effects of Medicaid Expansion on States

Despite the talking points, studies have shown that expanding Medicaid can benefit states, and not just due to federal funding.

• States that choose not to expand their Medicaid programs as of July 2014 will forego an estimated $88 billion in federal funding from 2014-2016 and will reduce the Nation’s economic output by approximately $66 billion through 2017.

• States have gained savings from reductions in expenditures on behavioral health programs (mental health and substance abuse services).

• In Kentucky, the first state to release a post-expansion study with updated estimates on the impact of their Medicaid expansion, the estimated economic contribution is projected to be $30.1 billion from 2014 to 2021. Their report also finds that there will be a net positive impact on their state budget of $919.1 million and job growth of 12,000 jobs in the state fiscal years 2014 and 40,000 jobs from the state fiscal years 2014 to 2021.

From ASPE.HHS.Gov

“Expanding Medicaid has positive economic effects. These two fact sheets highlight information on the economic impact of Medicaid expansion on individuals’ financial circumstances, uncompensated care costs and state Gross Domestic Product (GDP). Research confirms that expanding Medicaid will benefit states both directly and indirectly by generating additional federal revenue, increasing jobs and earnings, increasing Gross State Product (GSP), increasing state and local revenues (via provider taxes and fees and increased prescription drug rebates), and reducing uncompensated care and hospital costs.”

Economic Impact of the Medicaid Expansion (PDF-3 Pages)

Insurance Expansion, Hospital Uncompensated Care, and the Affordable Care Act (PDF-1 Page)