Hospitals Reduce Charity Care To Encourage ACA Exchange Coverage

Hospital systems across the country are reducing the amount of financial assistance to low- and middle-income patients who are uninsured, in the hopes of encouraging such patients to enroll in coverage through the Affordable Care Act, the New York Times reports.

Hospitals are restricting their charity care programs primarily because of increasing costs, the Times reports. Hospitals always have had to cover at least some of the cost of such programs, which were offset partially by federal assistance. However, the ACA further reduces federal aid for hospitals that treat large numbers of low-income and uninsured patients. In addition, hospitals that primarily treat uninsured and low-income populations in states that have not expanded Medicaid under the law also are facing a lack of new Medicaid payments.

While only a few hospitals so far have rolled back their charity care programs, many more are considering the option and experts predict the trend will grow, the Times reports.

Hospitals' Restricted Policies

According to the Times, hospital executives say that the move will help encourage uninsured and low- to middle-income patients to purchase coverage through the ACA's insurance exchanges. In particular, the hospitals are focusing on reducing aid only for patients who fall between 200% and 400% of the federal poverty level, or have an annual income of $23,340 to $46,680 for an individual. Such patients likely have jobs and are eligible for subsidized coverage.

For example:

• Southern New Hampshire Medical Center no longer offers no-cost care to patients who are above the federal poverty level, or have incomes of about $11,670 for an individual;
• Fletcher Allen Health Care in Vermont has reduced financial aid for uninsured patients who have incomes between two and four times FPL; and  
• BJC HealthCare -- a not-for-profit health system that owns a dozen hospitals in Illinois and Missouri -- now only offers its 25% discount on billed charges for uninsured patients with incomes up to 300% of FPL.

Nancy Schlichting, CEO of the Michigan-based Henry Ford Health System, said, "Do we allow our charity care programs to kick in if people are unwilling to sign up" under the ACA? She added, "Our inclination is to say we will not, because it just seems that that defeats the purpose of what the [ACA] has put in place."

Patient Advocates Voice Concerns

Advocates for uninsured populations have argued that many U.S. residents did not purchase coverage in the ACA's initial enrollment period because they thought the plans were prohibitively costly, even with subsidies. According to the Times, undocumented immigrants also are ineligible for subsidized coverage (Goodnough, New York Times, 5/25).