Massachusetts Health Care Reform has Intended Effect for Most Hospitals

Proponents of health care reform have long believed that getting more people coverage would reduce demand for free care and cut uncompensated care costs. Now they have the numbers to prove it.

Yesterday the Massachusetts Hospital Association released an analysis of health care reform in the state that shows that expanded coverage brought about from health care reform there has reduced free care coverage by 28 percent, over a three year period, the same amount low income coverage increased during that period. Additionally, 41 hospitals saw a decline in uncompensated care in 2007, a 7.5 percent decrease when compared to 2006, according to the analysis “Hospital Uncompensated Care Trends & Health Care Reform.”

“Health care reform has proven to be successful beyond all of our expectations,” Lynn Nicholas, MHA’s president and chief executive said in a press release. “While it is true that we are entering the most challenging phase of reform, this analysis should offer encouragement to all stakeholders that the foundation and premise of health care reform is indeed sound.”

Massachusetts’ law requires residents to obtain health coverage that satisfies certain guidelines or face financial penalties when they file income taxes. Employers also are required to provide health care coverage for employees or pay a fee into a state health care coverage pool.

MHA analysis includes results for fiscal year 2007, the first full year the law was in effect. Although considered widely successful, declines in free care and uncompensated care expense were not shared by all hospitals. Uncompensated care expense, which typically includes charity care, bad debt and discounts to the uninsured, increased at 27 hospitals, according to the analysis. So did free care to low-income patients.

The MHA suspects the increase occurred because the number of uninsured living in the state is greater than assumed and that undocumented immigrants affect some hospitals more than others.

The analysis shows the biggest declines in uncompensated care expense occurred in Boston and Western Massachusetts area hospitals, particularly at Boston Medical Center, the state’s largest free care provider. When BMC is removed from statewide calculations, hospital uncompensated care dropped just 2.7 percent.

However, hospitals in Central and Southeastern Massachusetts showed an increase in free care of 7 and 3 percent respectively. And hospital emergency bad debt cost in the Southeastern region rose 14 percent in 2007, compared to 2006.

When grouped by type of hospital, teaching hospitals showed a 10 percent decline in free care in 2007, compared to 2006, and no change in emergency room bad debt. However those hospitals that serve a large percentage of free care patients, excluding Boston Medical Center and Cambridge Health Alliance, experienced a 6 percent decline in free care, but a 7 percent increase in emergency room bad debt cost.

The analysis was based on information gathered from Massachusetts acute care hospitals. The report conveys key findings of the hospitals’ experience through September 2007 and how it relates to expanded health coverage.