The State Of The Hospital Safety Net

PROLOGUE: A recent report by the Institute of Medicine (IOM)on the communitywide effects of uninsurance includes some troublingfindings on how hospitals are affected as the number of uninsuredpeople in their communities rises. Urban areas with relativelyhigh uninsured populations, for example, tend to have fewerbeds per capita; to offer relatively fewer services such asAIDS and psychiatric care for more vulnerable patients; andto have less standby capacity for high-intensity services suchas burn and trauma care. In rural communities, high uninsurancerates translate into lower margins and fewer intensive careand psychiatric beds. "Locally, residents are likely to subsidizecare for their uninsured neighbors through taxes and higherprices for health services and health insurance in their community,"the study found (A Shared Destiny: Community Effects Of Uninsurance,National Academies Press, 2003).

The IOM study found also that a high uninsurance rate or increaseddemand for services by the uninsured could affect a hospitalgoverning board’s thinking about whether to merge or consolidate,whether to convert to for-profit ownership, or even whetherto stay open or not. The mechanisms by which uninsurance ratestranslate into financial pressures on hospitals are complexand varied, however, and the IOM study (the last of its sixvolumes is due in January 2004) is likely to stimulate a far-rangingdebate on the social costs of uninsurance.

In their simulation of the likely effects of anticipated declinesin coverage, Catherine McLaughlin and Karoline Mortensen ofthe University of Michigan find surprisingly that the directfinancial impact on hospitals in most communities will not belarge. They deduce that those most likely to lose employment-basedcoverage and Medicaid are likely to be relatively low usersof services. As a result, the overall cost of providing servicesto these people is not likely to be overwhelming, although someinstitutions in communities with high uninsurance rates couldface serious problems.

Further detail on the impact of uninsurance comes from JoelWeissman and colleagues at Harvard Medical School and the Agencyfor Healthcare Research and Quality (AHRQ). In their surveyof physicians at 121 academic health center (AHC) hospitals,where 16–25 percent of the population served is uninsured,Weissman and colleagues found that in the past year AHC hospitalshad been unable to admit or were otherwise forced to limit careprovided to uninsured patients. The frequency of access problemsvaried sharply with the type of care being sought. Nearly afourth of clinical faculty said that they were rarely or neverable to secure nonemergency admissions for uninsured patients.Nearly half were rarely or never able to obtain outpatient mentalhealth or substance abuse services.

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