Sen. George Barker says uncompensated care has fallen 30 percent in states that expanded Medicaid

Virginia Democrats believe they have found evidence showing states that expand their Medicaid rolls are better off than those that reject expansion.

Sen. George Barker, D-Fairfax, told those gathered for an expansion rally in Woodbridge that hospitals in Medicaid expansion states have fewer patients who can’t pay.

"Those states who have adopted Medicaid expansion, and half of the states have -- what they have seen just in the first few months of this calendar year, 2014 – is a reduction in uncompensated care," he said. "That means people who show up at the hospital, show up at the emergency department, are uninsured and can’t pay anything – charity care that’s provided by the hospital – that’s gone down by 30 percent just in the first few months."

This seems to be an important point for their case, so we wondered about the origin of the figure.

First, let’s remember how we got here. The Affordable Care Act -- also known as Obamacare -- gives states the option of expanding Medicaid eligibility. Uncle Sam will pick up the entire tab for new enrollees during the next two years, that slowly declines to 90 percent with state’s picking up the remaining cost.Virginia has estimated that as many as 400,000 state residents could join Medicaid’s rolls.

The Republican-controlled House of Delegates refused to broaden the program, saying the federal government can’t be trusted to pay its promised share. That led to a months-long stalemate between the House and the Democratic-controlled Senate on the state’s two-year budget.  Gov. Terry McAuliffe, a Democrat, who earned a Promise Broken by signing a budget that did not include expansion, is exploring whether he can broaden the program without the consent of the legislature.

Uncompensated care is a key reason Virginia hospitals have pleaded with legislators to expand Medicaid. Across the country, uncompensated care totaled $45.9 billion in 2012, the most recent year for which data was available, according to the American Hospital Association. It was 6.1 percent of hospitals’ expenses that year.

When we asked Barker about his claim, he sent us a link to an article from Governing magazine.

The article cites a study from the Colorado Hospital Association that looked at 30 states, 15 with Medicaid expansion and 15 without. In the states with expansion, hospitals had charity care decreases from an average of $2.8 million per hospital in the first quarter of 2013 to $1.9 million per hospital in the first quarter of 2014, a 32 percent drop. And out-of-pocket charges decreased from 4.7 percent of all charges to 3.1 percent of all charges -- a 34 percent drop. Meanwhile, Medicaid charges surged from 15.3 percent to 18.8 percent, a 19 percent jump.

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While the survey covered a short period of time, the difference between hospitals in states with Medicaid expansion and those without was stark. States that balked at Medicaid expansion saw little change in their uncompensated care levels, the study found.

Governing also linked to Arkansas Democratic Gov. Mike Beebe’s May 31 column in which he stated 42 hospitals in the state reported an average of 30 percent decline in uncompensated care. For emergency room visits, the hospitals had an average of 24 percent drop in uncompensated care. Beebe said the survey "was not comprehensive for every acute-care center in the state, but it’s a good snapshot of early progress."

Tenet Health, a publicly traded company with 80 hospitals in 14 states, reported that its hospitals in four states that expanded Medicaid saw a 33 percent decline in uninsured and charity admissions in the first quarter this year. In the second quarter, which ended in June, the numbers improved even more. With hospitals in five states that expanded Medicaid, the company had a decline in uninsured and charity admissions of 54 percent. Meanwhile, Medicaid admissions increased 23 percent.

We also found an Arizona Daily Star article reporting on a survey of hospitals in the state done by the Arizona Hospital and Healthcare Association. In the first four months of 2014, the association’s hospitals reported a 31 percent drop in uncompensated care expenses compared to the same period in 2013.  So this seems to be a broader trend.

This is how the law was intended to work, said Gayle Nelson, director of hospital community benefit program at The Hilltop Institute, part of University of Maryland, Baltimore County.

"This was all part and parcel of the same anticipation that this would happen," she said. "The need for uncompensated care would reduce and the funds needed to address uncompensated care would also be reduced … This is good news. Of course, in those states where uncompensated care is reduced, that presumably leaves some resources freed up to be used in other ways."

The Governing article said the trend was positive, but hospitals are hoping it’s enough to offset cuts called for in the Affordable Care Act. The biggest piece of this will be $39 billion in cuts to the Disproportionate Share Hospital program, which helps hospitals that serve the poor. In Virginia, this primarily means the University of Virginia and Virginia Commonwealth University hospitals.

Our ruling

Barker said hospitals in states with Medicaid expansion have already benefited from a 30 percent drop in uncompensated care. The evidence is based on the first three months after Medicaid expansion took effect and from a few sources. It’s early, but he accurately reported the results.

The statement is True.