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Health care reform credited with $7.4 billion drop in uncompensated care

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Hospitals’ uncompensated-care costs in Medicaid expansion states were reduced by $5 billion in 2014, according to a Health and Human Services report published Monday, the fifth anniversary of President Obama’s signature health care law.

The costs of uncompensated care declined $2.4 billion in states that did not expand the program, resulting in a total drop of $7.4 billion, down 21% from 2013.

In these states, the uninsured populations dropped as some residents gained insurance through the law’s insurance exchanges and others who were already eligible for Medicaid enrolled as a result of the intense enrollment efforts tied to the coverage expansions, a dynamic known as the woodwork effect.

Still, HHS estimates hospitals could have saved an additional $1.4 billion if the remaining states had raised Medicaid eligibility.

To date, 28 states and the District of Columbia have expanded Medicaid eligibility to people with incomes up to 138% of the federal poverty level under the ACA. Medicaid enrollment has grown 19.3% to 70 million enrollees as of January this year, up from 57.8 million enrollees in September 2013.

The Obama administration’s tally of $7.4 billion in reduced costs for hospitals surpassed an earlier estimate. HHS previously predicted $5.7 billion would be saved last year in uncompensated-care costs. Hospitals in states that expanded Medicaid were projected to save up to $4.2 billion, while hospitals in states that have opted not to expand Medicaid were projected to save up to $1.5 billion this year.

Virgil Dickson writes for Modern Healthcare, a sister publication of Business Insurance.