Working Paper: NBER ID: w21290
Authors: Craig Garthwaite; Tal Gross; Matthew J. Notowidigdo
Abstract: American hospitals are required to provide emergency medical care to the uninsured. We use previously confidential hospital financial data to study the resulting uncompensated care, medical care for which no payment is received. We use both panel-data methods and case studies from state-wide Medicaid disenrollments and find that the uncompensated care costs of hospitals increase in response to the size of the uninsured population. The results suggest that each additional uninsured person costs local hospitals $900 each year in uncompensated care. Similarly, the closure of a nearby hospital increases the uncompensated care costs of remaining hospitals. Increases in the uninsured population also lower hospital profit margins, which suggests that hospitals cannot simply pass along all increased costs onto privately insured patients. For-profit hospitals are less affected by these factors, suggesting that non-profit hospitals serve a unique role as part of the social insurance system.
Keywords: uncompensated care; health insurance; Medicaid; hospital economics
JEL Codes: H51; I11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| uninsured population (I13) | hospital uncompensated care costs (I13) |
| uncompensated care costs (I13) | hospital profit margins (D33) |
| hospital ownership type (L32) | uncompensated care costs (I13) |
| uninsured population (I13) | hospital profit margins (D33) |
| uncompensated care costs (I13) | financial strain on nonprofit hospitals (L39) |
| closure of a nearby hospital (J65) | uncompensated care costs for remaining hospitals (I13) |