Hospitals should reconsider charity care for middle-class, insured patients

The Affordable Care Act (ACA) appears to help the poor the most (those who actually purchase heavily subsidized commercial policies and don't buy into the propaganda about socialized medicine and death panels). But the middle class? Not so much, it seems.

That's what I glean from the recent Gallup Poll about the most pressing financial concerns for Americans. Fifteen percent of Americans surveyed say that the cost of healthcare is the most important financial problem facing their families, according to the poll.

That's a worrying number on its own, but there is a pretty stark divide among the respondents. That 15 percent figure is among those polled who said they had enough money to live comfortably. Among those who don't have enough money to live comfortably, only 11 percent said they had concerns about healthcare costs.

That's because of the two primary components of the ACA, the expansion of Medicaid eligibility to 138 percent of the poverty level--nearly $33,000 for a family of four--has covered far more Americans than the health insurance exchanges. And while expansion has been optional, 32 states still opted for the increased coverage.

There were more than 72 million Americans enrolled in Medicaid and the Children's Health Insurance Program (CHIP) as of last month, according to the Centers for Medicare & Medicaid Services (CMS). That's up from less than 55 million in 2010, the year the ACA was signed into law, and up 15 million since 2013. There were only 47.7 million enrolled in Medicaid in 2008, the year the financial crisis and the Great Recession descended.

Medicaid doesn't pay providers particularly well, but aside from a few Red states that reluctantly agreed to expand Medicaid with the proviso of sticking their poorest residents with co-payments, few get significant bills from the program, if they receive a bill at all.

Interestingly, a recent study by the National Bureau of Economic Research has concluded that the Medicaid expansion has helped to cut medical debt among low-income Americans by as much as $1,000 a year.

That doesn't appear to be the case for those who have commercial insurance--their deductibles, out-of-pocket costs and premiums have been rising relentlessly. And UnitedHealth's decision to pull out of the state exchanges doesn't indicate positive outcomes. It did at a time when it was actually beating earnings estimates, solely to continue boosting a bottom line that is as rising assuredly as its enrollees' costs.

Total enrollment in Medicaid and Medicare is about 128 million. Despite the often loud protestations against socialized medicine, 40 percent of the U.S. population now has some form of universal coverage, based on either age or income (Medicare out-of-pocket costs is an issue to discuss for another time). But the other 60 percent do not, and it is a nagging and no doubt growing concern. That Sen. Bernie Sanders' call to have "Medicare for all" has resonated with voters is no surprise.

With the poor and aging having relatively few worries about medical costs, it may be time for hospitals to shift more of their charity care priorities to those patients who actually have insurance. Most hospitals already earn their margins on commercial enrollees to begin with, so such a shift would not exactly be a loss leader. And hopes of defraying some out-of-pocket costs could prove a powerful marketing tool to draw more insured patients. Instead, what I have been seeing is hospitals becoming more aggressive on collection efforts, which may fatten the coffers now but is probably not the best long-term strategy available.

Hospitals in states that have yet to expand Medicaid have fewer options. But given the mounting worries about healthcare costs occurring among their patient base, their lobbying groups could make this a pocketbook issue with voters--who may actually relent on thinking that being squeezed or even bankrupted by their healthcare system is a unique privilege of being American. --Ron (@FierceHealth)