Financial Assistance Policy, Hospital Charity Care, and Medical Debt in Collections

Area of Science:

• Public Health
• Health Policy
• Health Economics

Background:

• Medical debt is a significant public health issue, with hospital bills constituting the majority of this debt.
• State financial assistance policies (FAPs) aim to expand hospital patient eligibility for aid, but their effectiveness in reducing medical debt is not well-established.

Purpose of the Study:

• To evaluate the association between Oregon's FAP and the prevalence of medical debt in collections.
• To assess the impact of Oregon's FAP on hospitals' charity care and bad debt expenditures.

Main Methods:

• A difference-in-differences and event study analysis was conducted using county- and hospital-level data from 2015 to 2022.
• The study compared Oregon (which implemented an FAP) with control states that expanded Medicaid in 2014 but lacked similar FAPs.
• Key outcome measures included the percentage of the population with medical debt in collections and hospital charity care and bad debt expenditures as a percentage of operating expenses.

Main Results:

• Oregon's FAP was linked to a significant decrease in the percentage of the county population with medical debt in collections (-1.67%).
• The policy was also associated with a significant increase in hospital charity care expenditures (0.31% of operating expenses).
• No significant changes were observed in hospital bad debt expenditures.

Conclusions:

• Oregon's FAP demonstrated effectiveness in reducing medical debt in collections and increasing charity care spending.
• State-level financial assistance policies represent a viable strategy to mitigate medical debt, particularly amid potential federal policy shifts.
• These findings underscore the potential of targeted state policies to address the medical debt crisis.