The total amount of uncompensated care by hospitals in Minnesota rose from $573 million in 2013 to $589 million in 2014, despite a 26% drop in charity care for the uninsured, according to the Minnesota Hospital Association.

A surge in patients with bad debt added to a 4.6% increase in what the hospital association reports as its "community benefit" - the total amount of unreimbursed support they provide to the state. The total community benefit was $4.3 billion in 2014, the first year in which a mandate under the Affordable Care Act required Americans to have health insurance.

An increase in Minnesota residents with health insurance hasn’t lowered the uncompensated care provided by the state’s hospitals but it has shifted the dynamic from charity care to bad debt from insured patients who couldn’t afford their medical bills. Many people who previously were uninsured now have low-cost plans. They can afford them until they become sick and find high deductibles that must be paid out of pocket, said Lawrence Massa, president and CEO of the association. 

"As we change the dynamic of who pays for health care, it’s taken a while for regular Minnesotans to build a surplus into their budgets to take care of those kinds of things,” he said.

The Affordable Care Act challenged hospitals to assess the needs of their communities and to rank them. Massa is concerned about the rise in bad debt. Writing off the cost of a needy patient as upfront charity is more efficient and less stressful than trying to collect from someone who’s broke and can’t pay insurance deductibles.

Examples of community benefit in the association's report, released Thursday, included exercise options provided by one hospital, emotional support to new mothers provided by another and visits provided by paramedics to mentally ill patients after hospital discharges. This type of community service amounted to $402 million, roughly 10% of the total community benefit. An estimated $2.5 billion, the association said, was due to hospitals absorbing the costs of serving patients covered by government Medicare and Medicaid programs, which reimburse at well below hospitals’ requested rates. Critics question the inclusion of such “underfunding” as a community benefit, because hospitals balance out such losses by charging privately insured patients more. 

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