Impact of the ACA on Hospital Admissions, by Primary Payer Type

The primary purpose of the Affordable Care Act (ACA) was to ensure individuals had access to health insurance coverage and to limit the number of individuals without coverage. Given that the main provisions of the ACA were phased in during 2014, data on the first three years of admissions under the act are now available for review.

A breakdown of admissions by primary payer type for the three-year period shows the percentage of admissions where the beneficiary was reported as uninsured (self-pay) declined from 4.1 percent of total admissions in 2013 to 2.66 percent in 2015, a decline of nearly 35 percent. Using this lone metric, one could conclude that the ACA was a success, in that it appears to have met its primary goal of reducing the number of individuals without healthcare coverage. What this lone metric does not show is where the formerly self-pay individuals have moved and what the potential financial impact from the resulting shift in coverage could be for hospitals.

Admissions covered by charities increased during this period, to where they accounted for more than 2 percent of total admissions in 2015. Although this number may seem low in terms of total admissions, the average length of stay (ALOS) for a charity covered admission is the highest for any reported group at almost 7 days per admission. The average charge for these admissions increased 13 percent from 2013 to over $41,000 in 2015.

Admissions covered by a commercial insurer (whether employer based or private) as a percentage of total admissions increased 3.6 percent to nearly 34 percent of total admissions, with the average charge of a commercially covered admission increasing 8.1 percent to nearly $40,000. This increase in charges is more than twice the amount of the increase in Medicare (3.5 percent) and Medicaid (2.5 percent) charges.

Any corresponding increases in the costs associated with these increasing ALOS and/or charges will challenge hospitals to carefully manage their costs as the patient population continues to move away from a self-pay (uninsured) patient population to one covered by insurers or charities, all of which will be looking to manage their costs and lower payments.

Footnotes

Many states collect inpatient admission data from hospitals via a state agency, a hospital trade association, or an outside vendor and, in turn, create and make available non-identifiable data sets for commercial and academic use. The states range from large to small and span the entire length and depth of the country, providing a comprehensive social, ethnic, and geographic base from which comparisons can be made. This analysis draws on the most current three years of data (2013-15) collected from those states where 2015 data have been made available. These data were combined into a single archive of inpatient hospital data for analytic and benchmarking purposes to form a universe from over 146 million potential lives and over 17.3 million yearly admissions.

Comparison of Hospital Admissions by Payer Type, 2013-15

This analysis was provided by Optum Advisory Services. Please contact Jan Welsh with any questions or comments.