'Charity Care' for Minnesota Hospitals Plunges Following Implementation of Obamacare: Report

Health officials are calling a drop in charity care and bad debt at Minnesota hospitals a "positive sign" that reflects progress in reducing the number of Minnesotans going without health care coverage. Since the implementation of the Affordable Care Act (ACA) in 2013, uncompensated care costs at hospitals have decreased by 16.7 percent in Minnesota, according to new analysis by the Minnesota Department of Health (MDH).

In 2015 alone, hospital uncompensated care fell for a second straight year, from $305 million to $268 million. This one-year drop of 12 percent brings uncompensated care down to 2008 levels, when hospitals also spent $268 million, according to health officials.

What is charity care and bad debt?

Uncompensated care has two components, charity care and bad debt. Charity care is care that hospitals provide without expecting payment, and bad debt is payment that hospitals expect, but do not receive, for care provided.

In 2015, both components of uncompensated care declined. Charity care dropped by $18.7 million (a 15.1 percent decline) and bad debt declined by $18.5 million (10.2 percent) compared to 2014.
Lack of insurance coverage is a primary factor in spending for both components of uncompensated care, but bad debt is also accumulated by people with insurance coverage who struggle with cost sharing, for instance through higher-deductible policies.

Increase in health insurance coverage

An estimated 213,000 more Minnesotans had health insurance in 2015 compared to 2013. The state’s uninsured rate fell to 4.3 percent in 2015, down from 8.2 percent in 2013. In 2015, uncompensated care decreased for both insured and uninsured patients.

“While we still have significant challenges to ensure that all Minnesotans have access to high-quality health care at affordable rates, this drop in charity care and bad debt is a positive sign that reflects our progress in reducing the number of Minnesotans going without coverage,” said Minnesota Commissioner of Health Dr. Ed Ehlinger in a statement.

“We need to continue our work in addressing the underlying causes of high health care costs through smart reforms, and at the same time we need to sharpen our focus on keeping people healthy.”

The majority of hospitals saw a decline in uncompensated care costs (97 hospitals), but 34 hospitals had an increase. Hennepin County Medical Center was the largest provider of uncompensated care followed by the two Mayo hospitals in Olmstead County, according to health officials.

Image via Minnesota Department of Health