Health Policy Journal Club

Everyone Else Ends Up Paying the Price

Every 1% increase in uninsured leads to a $20 increase in ER bills for privately insured.

"When someone without health coverage gets urgent—often expensive—medical care but doesn't pay the bill, everyone else ends up paying the price." 

This quote reflects the idea that hospitals that provide high levels of uncompensated care to uninsured patients must defray these costs. Many of these hospitals are granted federal Disproportionate Share Hospital (DSH) payments, but it is often inadequate to offset the full extent of lost revenue. In response, hospitals may provide differential treatment by insurance status, recommending more expensive treatment to those with insurance. This is known as the "spillover effect." They may also use "cost shifting," charging insured patients more for treatment in response to a lack of payment from uninsured patients.

Evidence to support this notion has been limited and conflicting. It is, however, thought to occur more commonly in the emergency department, which accepts all patients regardless of insurance status and absorbs large levels of uncompensated care.

This study examined the association between uninsured rate per county and the average amount paid for emergency department visits from 2009-2013. The authors found that an increase of 1% in county uninsured rate was associated with a $20 increase in average emergency department payment for those with private insurance. Increased costs were not seen for public insurance plans.

The study provides evidence that the "spillover effect" due to high uninsured levels can lead to increased health care costs for those with private insurance. Notably, this study used data from 2009-2013, before many of the provisions of the ACA went into effect in 2014. The full implementation of the ACA has reduced uninsured by 18.1 million Americans. It has also reduced uncompensated care by 4.1% in states that expanded Medicaid.

In anticipation of increased levels of insurance and decreased uncompensated care, the ACA reduces federal DSH payments by 41% by 2020. However, reductions in uncompensated care may not be enough to offset the loss of DSH payments. Furthermore, efforts to dismantle portions of the ACA leaves the coverage status for millions of newly insured Americans in question.

Repealing the ACA without restoration of DSH payments would be a major blow to hospitals and could lead to further increased costs for privately insured patients. Any future health care reforms efforts must seek to maintain current levels of insurance. If not, we may all find ourselves paying the price.

Abstract: Kirby JW, Cohen JW. Do people with insurance who live in areas with high uninsurance rates pay more for emergency department visits? Health Serv Res. 2017; Feb. Ahead of print. doi: 10.1111/1475-6773.12659.

OBJECTIVE: To investigate the relationship between the percent uninsured in a county and expenditures associated with the typical emergency department visit.

DATA SOURCES: The Medical Expenditure Panel Survey linked to county-level data from the American Community Survey, the Healthcare Cost and Utilization Project, and the Area Health Resources Files.

STUDY DESIGN: We use a nationally representative sample of emergency department visits that took place between 2009 and 2013 to estimate the association between the percent uninsured in counties and the amount paid for a typical visit. Final estimates come from a diagnosis-level fixed-effects model, with additional controls for a wide variety of visit, individual, and county characteristics.

PRINCIPAL FINDINGS: Among those with private insurance, we find that an increase of 1 percentage point in the county uninsurance rate is associated with a $20 increase in the mean emergency department payment. No such association is observed among visits covered by other insurance types.

CONCLUSIONS: Results provide tentative evidence that the costs associated with high uninsurance rates spill over to those with insurance, but future research needs to replicate these findings with longitudinal data and methods before drawing causal conclusions. Recent data on changes in area uninsurance rates following the ACA's insurance expansions and subsequent changes in emergency department expenditures afford a valuable opportunity to do this. PMID: 28176307

EMRA + PolicyRx Health Policy Journal Club: A collaboration between Policy Prescriptions and EMRA

As emergency physicians, we care for all members of society, and as such have a unique vantage point on the state of health care. What we find frustrating in our EDs - such as inadequate social services, the dearth of primary care providers, and the lack of mental health services - are universal problems.

As EM residents and fellows,  we learn the management of myocardial infarctions and traumas, and how to intubate, but we are not taught how health policy affects all aspects of our experience in the ED. Furthermore, given our unique position in the health care system, we have an incredible opportunity to advocate for our patients, for society, and for physicians. Yet, with so many competing interests vying for our conference education time, advocacy is often not included in the curricula.

This is the gap this initiative aims to fill.  Each month, you will see a review of a new health policy article and how it is applicable to emergency physicians.