Uncompensated care costs have risen nearly 36 percent at Connecticut hospitals over the last four years, as the deep recession has left more residents without insurance coverage.
The end result is that Connecticut hospitals are providing more care that is not being reimbursed, adding to their financial strain.
In 2009 alone, Connecticut’s 30 acute care hospitals provided more than $258 million on uncompensated care, according to hospital financial records released by the state’s Office of Health Care Access.
That was a modest 1 percent increase over the prior year period. But since 2006, uncompensated care costs have been on a steady uptick in Connecticut, going from $191 million to nearly $260 million.
By law, all emergency, non-elective patients at Connecticut’s hospitals must be treated, regardless of their ability to pay.
Stephen Frayne, senior vice president of health policy for the Connecticut Hospital Association, said the increase is largely being by driven by the recession.
High unemployment has left more people uninsured, so when they go to the emergency room, hospitals aren’t guaranteed payments for those services.
At the same time many employers are cutting costs by reducing the amount of money they contribute to employee’s health plans. That’s shifting more of the cost burden to workers, who may not be able to afford it.
“There is a lot of upward pressure on insurance premiums, so employers have been shifting to more high deductible plans,” Frayne said. “When people become liable for the first $5,000 to $10,000 in medical costs, they may not be able to afford it, or they might not be willing to pay it.”
There are two levels of uncompensated care — charity care and bad debts.
Charity care occurs when the hospital knows in advance that the care provided will not be reimbursed. A hospital may incur bad debt when patients are unable or unwilling to pay their bills, but do not apply for charity care.
In 2009, bad debts accounted for nearly 71 percent of uncompensated care charges, while charity care accounted for only 29 percent.
That signals that it’s not just the uninsured who aren’t paying their hospital tabs.
Insured patients may have difficulty meeting co-pay, deductible or co-insurance obligations, which may ultimately become bad debt, Frayne said.
That problem is being exacerbated by the recession, as workers become responsible for paying for more of their health care.
Uncompensated care in hospitals across the nation has risen in nearly every year since 1980, and accounted for $36.4 billion dollars in cost, at the end of 2008, according to the American Hospital Association.
The top provider of uncompensated care in Connecticut is Yale-New Haven Hospital, which provided $32 million in free care in 2009. Stamford and Hartford hospitals each experienced $21.5 million in uncompensated care costs in 2009, while St. Francis saw its costs reach $11.6 million.
The future of uncompensated care costs in Connecticut remains in question. Health care reform will undoubtedly provide insurance coverage to more Connecticut residents, which should lower the amount of free care hospitals need to provide.
Frayne estimates that of the nearly 340,000 people in the state who lack coverage, about a third will be picked up on private insurance and another third will be eligible for Medicaid.The rest will remain uninsured.
But even those added to the state’s Medicaid rolls will likely be receiving care at a financial loss to hospitals. That’s because Medicaid, which is funded by the state, provides reimbursement levels below the cost of providing care.
“A lot more folks are going to have insurance, that’s a good thing,” Frayne said. “But the bad thing is that at least a third of these folks are going to be going into programs that are poorly funded to begin with.”
