Hospitals Say Private Option Cuts Charity Care By Half, Opponents Cite Long-term Concerns

The number of uninsured patients treated by Arkansas hospitals for inpatient care decreased 48.7% from 2013 to 2014, the Arkansas Hospital Association reported Thursday. Across all hospital patient care settings, uncompensated care among responding hospitals decreased by $149 million, or 55.1%.

The AHA credited the private option for the decrease, but two legislative opponents say problems with the program remain.

The results come from an April survey conducted by the AHA and the Arkansas Chapter of the Healthcare Financial Management Association. The hospitals that responded represent more than 80% of the state’s hospital services measured by revenues and admissions.

The hospitals reported 11,698 uninsured patients receiving inpatient care in 2014, a decrease from the 22,786 uninsured inpatients reported in 2013. Uninsured outpatient visits dropped by 45.7%. Uninsured emergency room visits fell 38.8% at the same time that overall E.R. visits increased 5%.

In a press release, the AHA credited the private option, the state program that uses Medicaid dollars to purchase private insurance for lower-income Arkansans. It said the private option is offsetting Medicare cuts to hospitals made because of the Affordable Care Act. Ray Montgomery, President/CEO of Unity Health, said his Searcy hospital system is absorbing a $66 million reduction in federal funding over the next six years because of that provision of the ACA.

“The responses to this survey show once more that the new insurance coverage provided through the private option has reduced uncompensated care losses for hospitals in the state, giving every Arkansas hospital a way to better manage the effects of Medicare payment reductions that have grown over the past few years,” said AHA President and CEO Bo Ryall, in the press release.

Ryall said the private option has helped rural hospitals in Arkansas avoid closing, unlike what has happened in other states.

A Gallup poll released last summer found that Arkansas had the nation’s steepest drop in its uninsured rate – from 22.5% in 2013 to 12.4% in 2014. Almost half of Arkansans who were not insured in 2013 are now insured, according to that survey.

The private option was passed narrowly in 2013 and barely won enough votes to be reauthorized in 2014. This year, Gov. Asa Hutchinson asked legislators to authorize it through 2016 while creating a Health Reform Legislative Task Force to produce an alternative in the context of overall health care reform. That task force next meets on Wednesday.

LONG-TERM CONCERNS
The task force’s co-chair, Sen. Jim Hendren, R-Sulphur Springs, who has voted against the private option in the past, said that while the news is good for hospitals, it doesn’t change the private option’s underlying financial dynamics. The federal government currently pays practically all of the private option’s cost. Starting in 2017, Arkansas is responsible for 5% of the cost, a number that increases over time to 10% by calendar year 2020.

“As a former hospital board member, I am a strong supporter of local hospitals, and I am glad they are having less government mandated care dumped in their laps,” Hendren wrote in an email to Talk Business & Politics. “It is unfair to require services be provided but then refuse to pay for them.

“I’ve said many times that it is not surprising that injecting an additional billion tax dollars into Arkansas’ healthcare system will have some positive results. What is surprising is that after that huge investment, we still see ER utilization increasing. Obviously, hospitals are a large part of the cost of the private option, and the $140 million savings is a long way from the one billion dollar cost. This is one piece of the puzzle and we have many to study. Every bit of data helps and this is good information that I’m sure the task force will be considering.”

State Rep. David Meeks, R-Conway. a private option opponent and a member of the task force, said the issues regarding the private option remain: the cost to the federal government and the effect on the national debt, and the cost to the state government when Arkansas begins to pick up part of the tab.

“It doesn’t surprise me that the private option did lower uncompensated costs,” he said, “but my concern has always been with the private option is the sustainability of it and whether it was the actual right solution in order to address those uncompensated care costs… We’re going to continue the work of the health care task force and hopefully come up with a better solution to help continue to lower the uncompensated care costs of hospitals and make sure that all Arkansans have access to affordable health care and do it in a sustainable, conservative way.”