Keith Hearle, president of Verite Healthcare Consulting in Alexandria, Va., said only a small number of hospitals so far have adopted policies denying charity care for patients eligible for subsidized coverage under the reform law. But such limits likely will become standard in the future, he predicted.
Hospital charity-care policies have long played an important role in the U.S. healthcare safety net by forgiving the medical bills of the poor and uninsured. Now that role appears to be changing, albeit unevenly and amid concerns from hospital leaders. Some say public confusion about the law and tight household budgets are good reasons to leave financial aid policies unchanged. There also is an overlay of uncertainty about the law's future given continuing political opposition in Congress and pending court challenges.
About 60% of U.S. hospitals are not-for-profit, charitable organizations that are required to provide community benefits such as free and discounted care in exchange for their tax-exempt status. The amount that hospitals spend on free care as a percentage of their operating expenses varies widely. One 2013 study of 1,800 tax-exempt hospitals, published in the New England Journal of Medicine, found that the amount of free care they provided did not correspond to the local rates of uninsured.
The Affordable Care Act included new provisions for financial aid and collection policies that not-for-profit hospitals must meet or risk losing their tax exemption. But the provisions stop short of mandating who should be eligible for financial aid. Federal officials have not yet released final rules, but financial aid policies will likely undergo broad review at many hospitals once the rules are published, Hearle said.
Hospitals' new limits on financial aid gradually could prod more uninsured people to buy coverage, hospital executives say. In addition, some of the uninsured will face higher federal income tax penalties in 2015 for not obtaining coverage. The levy for those who remain uninsured will jump to $325 or 2% of their taxable income, whichever is greater, from the 2014 penalty of $95 or 1% of taxable income. The penalty increases again in 2016 to $695 or 2.5% of income.
While HHS estimates that 9 million to 10 million Americans will buy coverage on the exchanges for 2015, millions of uninsured people are not expected to get coverage.
A recent federal estimate said about 15 million uninsured people are eligible to buy coverage through the exchanges. Among uninsured adults surveyed in early November by the Kaiser Family Foundation, 4 in 10 said they planned to remain uninsured; of those, nearly one-quarter cited cost as the reason. Many, if not most, are likely eligible for premium subsidies.