Unpaid Hospital Bills Fall as ACA Expands
August 2015 - Forbes magazine isn't the biggest fan of the Affordable Care Act (ACA), but they ran an interesting online article the other day regarding the ACA's impact on hospital costs.
Universal Health Services (UHS), who operates hospitals across the nation, announced second quarter earnings and, for the sixth consecutive quarter, they reported decreases in their unpaid billings.
By unpaid billings, we are referring to the hospital charges that the hospitals have billed to their patients and that the patients have not yet paid.
This decrease in unpaid billings has allowed UHS to forecast an increase in their earnings estimates through the end of the year, in part by reducing what accountants call UHS's "provision for doubtful accounts**".
 (image from npr.org)
In the case of UHS, their provision for doubtful accounts also has fallen for six consecutive quarters, which indicates that UHS has been able to collect more of their total billed amounts and that they expect that trend to continue.
This is good news for all of us, because fewer unpaid billings means UHS should not have to increase their charges to the rest of us, as they have in the past, to make up for patients that have been unable to pay.
All of this is right in line with what healthcare economists have been projecting would happen once the ACA took effect (and as the GOP projected as well, when they also were backing an ACA-type plan for universal health care - see our article, "Obamacare: The GOP was For It Before they were Against It"):
with millions of Americans now having healthcare coverage through either their own personal insurance policies or through Medicaid, insurers now are paying a share of those patients' hospital charges and the patients' share of those billings has fallen. The latter has resulted in the patients being more able and more likely to pay and both aspects are increasing hospital revenue.
The bottom line is that we should be seeing lower hospital costs for all of us, another plus coming out of the market-oriented approach of the ACA.
** {Accounting rules require that companies set up a "provision for doubtful accounts", which basically acknowledges that some of their customers (or patients in UHS's case) will not be able to pay their bills and those amounts will end up being written off as a bad debt.
These provisions are established based on the company's history of customer bad debts and are audited by the company's auditing firm.}
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