Drop in uninsured is a mixed blessing for hospitals

William Castro, 46, at home in Camden, New Jersey.

Some of the big, urban hospitals around the country – the "safety net" hospitals that serve the poor – are getting hit with a dose of good news.

Under the Affordable Care Act, the number of uninsured patients is dropping sharply. Hospitals like Our Lady of Lourdes in Camden, New Jersey, are now spending millions less on providing charity care.

William Castro is one of thousands of patients Lourdes had treated for free. A car accident in 2010 left him suffering with chronic back pain. 

“You know what it is... you’re a grown man and it’s so bad you have to take hot showers, you are crying at night,” says Castro.

Without health insurance, Castro made monthly visits to the hospitals where doctors scribbled out prescriptions.

The 46-year-old says he struggled to scrape up the money to buy his meds.

“You are talking about $300-$350 a month. And a person that’s not able to work... can you imagine, having zero? Needing this medication, and have to count on your family, loved ones, friends... then next month you have to do it all over again?” he says.

Now on Medicaid, Castro has his prescriptions covered – no co-pays – and is hoping to enroll in a pain management course.

One by one, Lourdes CEO Alexander Hatala has watched his uninsured patient population fall from 8.5 percent of patients last year to 3 percent.

That’s a $3.5 million of savings at the Camden hospital.

“$3.5 million can make a difference between breaking even or operating in the red,” Hatala says.

What’s happening in Camden is happening around the country – at least for hospitals in states that expanded Medicaid under Obamacare.

This summer the Colorado Hospital Association – looking at stats from 30 states – found a 30 percent jump in Medicaid charges, and a 30 percent drop in charity care costs.

That puts hospitals on track to save billions this year.

“Yeah, there’s more money. But it also comes with a caveat,” says Ellen Kugler, Executive Director of the National Association of Urban Hospitals“There are a number of federal cuts coming and many more that are coming.”

Federal, state, and local government funding currently covers about 65 percent of charity care costs. Under the ACA, the plan has been to reduce that funding  - at least at the federal level - as more Americans gain insurance coverage.

In this new landscape, the Urban Institute’s Teresa Coughlin says these hospitals will now have to fight to keep their newly-insured patients: “Do they have contracts with [insurers]? Are they able to retain patients who became newly insured and still continue to come to their facility? Or will they go elsewhere now that they have a choice?”

Coughlin says some of these hospitals are considered second-tier facilities, and to keep their doors open, they must build relationships with insurers and convince consumers they offer excellent service for a fair price. 

A whole new world, says Coughlin - a world where not all safety net hospitals may survive.

About the author

Dan Gorenstein is the senior reporter for Marketplace’s Health Desk. You can follow him on Twitter @dmgorenstein.

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