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Medicaid shortfalls and total unreimbursed hospital care for the poor, 1980-1989
I Fraser1, J Narcross, P Kralovec
1Division of Ambulatory Care, American Hospital Association, Chicago, IL 60611.
Abstract:
This article examines the relationship between Medicaid payments and hospital costs from 1980 through 1989, using data from the American Hospital Association's Annual Survey of Hospitals. It finds that payments covered about 90% of Medicaid hospital costs until 1985, then declined to 78% in 1989. Together, Medicaid shortfalls ($4.2 billion) and unsponsored care ($8.9 billion) accounted for $13.1 billion in unreimbursed hospital costs in 1989. Most of the recent growth in unreimbursed hospital cost incurred in care for the poor is now caused by rising Medicaid shortfalls rather than increases in unsponsored care. While Medicaid shortfalls accounted for about one-fifth of unreimbursed care for the poor in 1980, they accounted for a third in 1989.
Insights
Medicaid payments covered most hospital costs until 1985 but declined significantly by 1989. Rising Medicaid shortfalls, not increased uninsured care, are now the main driver of unreimbursed hospital costs for the poor.
Area of Science:
- Health Economics
- Hospital Financial Management
- Public Health Policy
Background:
- Hospital costs and reimbursement are critical for healthcare access.
- Medicaid is a key payer for vulnerable populations.
- Understanding unreimbursed care is vital for financial stability.
Purpose of the Study:
- To analyze trends in Medicaid payments versus hospital costs from 1980-1989.
- To determine the contribution of Medicaid shortfalls to unreimbursed care.
- To compare Medicaid shortfalls with unsponsored care costs.
Main Methods:
- Utilized data from the American Hospital Association's Annual Survey of Hospitals.
- Examined financial data for the period 1980 through 1989.
- Calculated the percentage of Medicaid hospital costs covered by payments over time.
Main Results:
- Medicaid payments covered approximately 90% of hospital costs until 1985, declining to 78% by 1989.
- In 1989, Medicaid shortfalls ($4.2 billion) and unsponsored care ($8.9 billion) totaled $13.1 billion in unreimbursed costs.
- Medicaid shortfalls increasingly drove unreimbursed costs for the poor, rising from one-fifth in 1980 to one-third in 1989.
Conclusions:
- Medicaid reimbursement became increasingly inadequate throughout the late 1980s.
- The burden of unreimbursed care for the poor shifted towards Medicaid shortfalls.
- Policy attention is needed to address the growing gap in Medicaid hospital payments.