Hospitals as Insurers of Last Resort
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Abstract
American hospitals are required to provide emergency medical care to the uninsured. We use previously confidential hospital financial data to study the resulting uncompensated care, medical care for which no payment is received. Using both panel-data methods and case studies, we find that each additional uninsured person costs hospitals approximately $800 each year. Increases in the uninsured population also lower hospital profit margins, suggesting that hospitals do not pass along all uncompensated-care costs to other parties such as hospital employees or privately insured patients. A hospital's uncompensated-care costs also increase when a neighboring hospital closes.Citation
Garthwaite, Craig, Tal Gross, and Matthew J. Notowidigdo. 2018. "Hospitals as Insurers of Last Resort." American Economic Journal: Applied Economics, 10 (1): 1-39. DOI: 10.1257/app.20150581Additional Materials
JEL Classification
- G22 Insurance; Insurance Companies; Actuarial Studies
- I11 Analysis of Health Care Markets
- I13 Health Insurance, Public and Private
- L25 Firm Performance: Size, Diversification, and Scope
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