March 16, 2016; OpenMinds.com

Monica Oss has identified an intriguing trend in hospitals and healthcare. First, a brief groundwork is in order: Since the passage of the Affordable Care Human action (ACA), otherwise known as Obamacare, in 2010, policymakers have anticipated a move toward insuring more than Americans through a combination of expanded Medicaid eligibility and subsidized wellness insurance available through state-managed insurance exchanges. Healthcare, and thereby wellness insurance, would become more than affordable over fourth dimension through increased policy premiums existence paid by both governments (through Medicaid and subsidies for individual insurance) and policyholders benefitting from subsidies making insurance more affordable. One consequence of this model, as NPQ reported in 2012, was the possible reduction in the need for charity intendance services. Fewer people would exist medically indigent due to expanded insurance availability, especially to the poor, the middle class receiving subsidies, and people with chronic health weather who were previously unable to secure insurance.

Hospitals often talk nearly "uncompensated care." Oss says:

To explore this topic, we need to consider the ii elements of uncompensated care—bad debt and clemency care. Bad debt is defined equally any bill submitted for payment by a tertiary-political party payer or patient which is not paid in total. Charity intendance is divers every bit care provided to consumers at no cost with no expectation of payment.

On the one hand, Oss says, charity care costs at many hospitals take declined every bit a event of increased percentages of insurance-covered patients. This is peculiarly the result of Medicaid expansion. On the other hand, some hospitals have seen significant increases in bad debt expense. This has resulted in their combined "uncompensated care" figures every bit high or higher than earlier the ACA was enacted. Moreover, hospitals and hospital systems have had vastly different experiences with these changes; betwixt 2013 and 2015, some hospitals experienced as much as a 57 percent decrease in uncompensated care costs, while at least one system experienced increases of 42 percent.

Bad debt isn't equally predictable as charity care. This requires nonprofit hospitals to do more proactive budgeting to make provision for bad debt while simultaneously working inside ACA-imposed restrictions on debt collection by nonprofit hospitals. NPQ recently reported on a Louisiana infirmary that chose to surrender its IRS taxation exemption, in role due to the ACA'south debt collection provisions.

Having a higher percentage of insured patients isn't necessarily a assist to nonprofit hospitals, either. Medicaid payments to hospitals and doctors are typically lower than payments made by individual insurance, and all payors have been squeezing provider payments for years. Nonprofit hospitals' operating margins, especially rural hospitals, are at historic lows and continuing to decline.

Oss mentions the same possibility that NPQ identified iv years ago: that nonprofit hospitals will need to move their rationale for revenue enhancement exemption abroad from charity care every bit the need for charity care continues to decline. The question is whether Congress and the states are fix to consider a new definition of revenue enhancement-exempt hospitals when greenbacks-strapped government itself is looking for taxation dollars from nonprofits in the grade of PILOTs (payments in lieu of taxes) to support service provision in communities.—Michael Wyland