Minnesota Department of Health
Introduction The system of health insurance coverage and financing in Minnesota and the U.S. leaves some individuals struggling to meet their share of health care costs, resulting in health care providers bearing significant costs related to uncompensated care. It is the expectation of many health care observers 1 that implementation of the Affordable Care Act (ACA), 2 through its provisions affecting health care market regulation and the development of insurance exchanges, will reduce the need for provider-based uncompensated care. This issue brief estimates the potential reduction in hospital uncompensated care that may occur by 2016 in Minnesota.
Overview of Hospital Uncompensated Care
As shown in Figure 1, the amount of uncompensated care provided to hospital patients in Minnesota community hospitals is substantial and has been increasing over time. In 2011, hospital uncompensated care amounted to $308 million, almost two and a half times the amount ten years ago ($124 million). During the recent economic downturn, uncompensated care rose particularly steeply, growing at an average annual rate of growth of 6 percent since 2007; uncompensated care fell slightly in 2011. Overall, uncompensated care appears to be about evenly split between charity care (care provided for free or at a discounted rate to low income patients who are eligible for it), and bad debt (care for patients with a responsibility to pay, who do not meet that obligation). Charity care accounted for 49.3 percent Figure 1
Uncompensated Care at Minnesota Community Hospitals
Source: MDH Health Economics Program analysis of Minnesota hospital annual reports
of uncompensated care in 2011, bad debt made up the remaining 50.7 percent. The majority of uncompensated care is incurred on behalf of patients who lack insurance coverage and thereby an independent source of funding for health care. Generally, when uninsured patients in Minnesota present for hospital care, they are evaluated for