The first two years of broader health insurance coverage under the Affordable Care Act has been a boon to hospitals, but entering 2016 there could be cause for concern.
The nation’s investor-owned hospital companies began to report slowing hospital admission growth in the third quarter and new reports indicate an increase in unpaid medical bills that could continue into 2016.
Hospital operators including HCA Holdings, Tenet Healthcare and Community Health Systems are poised to take advantage of newly insured patients with subsidized private coverage and benefits from the health law’s expanded Medicaid program. But in some markets, the growth has slowed for various reasons.
“Some companies reported that a higher level of uncompensated care was a headwind to margins in the quarter,” Fitch Ratings said in a report out last week. HCA, for example, saw a 6% growth in uninsured patients in its hospital emergency rooms in the company’s third quarter. On Friday, however, HCA surprised Wall Street by saying it expects to beat fourth-quarter earnings expectations, adding more drama to the uncertain hospital finance picture.
Fitch Ratings had a different take earlier in the week.
“The benefits of the Affordable Care Act for acute care hospitals ramped up in early 2015, and the short operating history under the legislation makes it difficult to tell how much of the uptick in uncompensated care is related to a tapering of its benefits,” Fitch said in its report. “However, concerns regarding commercial viability of the public health insurance exchanges, and stalled progress of the expansion of state Medicaid programs indicate that the benefit may be slow to accelerate in the coming year.”
To be sure, 31 states including the District of Columbia have adoptedthe Medicaid expansion, but many of those remaining are concentrated in the southern half of the U.S. where Tenet, HCA, Community and other for-profit hospitals have most of their hospitals. Most southern states haven’t expanded Medicaid so uninsured rates remain higher in these areas, hurting hospital finances.
In Texas and Florida, long bastions for for-profit hospital ownership, Republican governors aren’t open to expanding Medicaid despite a lobbying blitz by the hospital industry to take advantage of the federal dollars available to increase coverage of poor residents in their states.
But hospitals have intensified their effort to help sign up uninsured Americans to private coverage available on the public exchanges and could see a boost in patient admissions from those admissions.
In Texas, for example, the Texas Hospital Association last week said 1.1 million of the state’s residents have thus far selected a health plan on the federal health insurance marketplace for 2016 coverage. But the association said it still has the entire month of January to beat last year’s enrollment of 1.2 million Texans and is confident it will do that.
“With one month left in open enrollment, Texas is on track to exceed last year’s marketplace enrollment figures,” said Ted Shaw, THA’s president and CEO. “Texas hospitals are thrilled to be a part of this success with our involvement in Insure Health. Insure Texas. The campaign’s messages of availability and affordability are simple but highly effective, and the evidence is in the enrollment data.”
A picture of hospital admissions will become clearer in the next month with Tenet, HCA, Community Health and Universal Health Services report their fourth quarter 2015 earnings and provide earnings forecasts for 2016.