Proposed Health Bill Would Increase Consumer Debt and Drive Up Uncompensated Care

The Senate health bill ends retroactive eligibility, hospital presumptive eligibility, and any presumptive eligibility determination for expansion adults, which includes many parents. The end of retroactive eligibility and hospital presumptive eligibility will drive up consumer medical debt, which was the largest cause of U.S. bankruptcies prior to the Affordable Care Act. It will also drive up uncompensated care costs for hospitals and providers. Here’s why.

In the many years I administered CHIP in New Hampshire, there was one key fact that explained why many uninsured individuals who were eligible for Medicaid or CHIP were not enrolled – they simply didn’t know they were eligible or they had encountered challenges in providing needed documents prior to the ACA’s push for electronic verification. If an individual was determined eligible for Medicaid after receiving health care, they could be enrolled retroactively up to 3 months prior to the date they applied for coverage, assuming they were eligible during that time. This meant that the cost of care they received would not create medical debt for the individual and, in turn, result in uncompensated care for health care providers.

But retroactive coverage doesn’t always ensure the most efficient use of services. Take for example an individual who after a visit to the emergency room cannot afford to purchase expensive drugs that were prescribed. Their condition may worsen and require more extensive or expensive services. That’s where presumptive eligibility comes in. Presumptive eligibility is a long-standing option that allows states to train qualified entities like schools or health care providers to make a temporary eligibility determination to ensure that the individual gets health care services while their regular Medicaid application is being processed. This encourages eligible individuals to follow-through on the treatment plan recommended by their health care provider and to complete the regular application process. Prior to the Affordable Care Act (ACA), states could only allow children or pregnant women to be enrolled presumptively. The ACA changed that.

Presumptive eligibility is widely viewed as an effective way to move the enrollment process into the community where trusted organizations can identify and enroll eligible people. With this in mind, the ACA allowed other groups, such as parents, expansion adults, and former foster youth, to be enrolled presumptively. And the ACA allowed hospitals to opt to make presumptive eligibility determinations, regardless of whether the state had otherwise adopted the policy. The law also gave states tools to ensure that hospital presumptive eligibility is not misused by requiring states to have oversight and allowing them to set performance standards for hospitals.

The combination of loss of retroactive coverage, hospital presumptive eligibility, and presumptive eligibility for expansion adults poses a triple whammy to individuals and health care providers. If a state is prohibited from providing retroactive coverage (as the Senate bill does) and hospitals are prohibited from using presumptive eligibility independently (as the Senate bill does), and expansion adults cannot be enrolled presumptively at all (as the Senate bill does), then the days when medical debt and uncompensated care were significant problems in the health care system will be back.

In addition to cutting about $772 million in the federal contribution to Medicaid through 2026 and putting coverage at risk for 22 million people, the Senate repeal bill will certainly reverse our progress on many fronts. Since the ACA’s private insurance protections eliminated lifetime limits and guaranteed coverage for people with pre-existing conditions, the number of personal bankruptcies has declined by half. Additionally, the uncompensated care burden fell sharply in states that expanded Medicaid from 3.9 percent to 2.3 percent between 2013 and 2015. And between 2013 and 2015, the percentage of uninsured parents fell from 20 percent to 13 percent.

The loss of retroactive eligibility and hospital presumptive eligibility are just two examples of how the Senate bill will reverse the progress we have made in covering children and threaten the economic security of low-income families. There are lots more reasons such as the fact that the bill not only fails to address challenges in our health care system like the rising cost of prescription drugs but also takes health care away from poor children and families in order to provide tax cuts for wealthy. Such policies make it clear that helping children succeed in school and life and helping families attain greater economic security are not top priorities for policy makers in Washington.

Tricia Brooks
Tricia Brooks is a Research Professor at the Georgetown University McCourt School of Public Policy’s Center for Children and Families