Anything "free" is a myth. My free Medicare isn't free; SS Admin pays for it. Free VA care isn't free; the VA pays for it. When all else fails, the hospital pays. No country with free care gives free care; taxpayers pay the bills.
It all centers on something called DSH payments (pronounced "dish" payments, in health-wonk parlance). That stands for Disproportionate Share Payments, extra money that Medicaid sends to hospitals that provide a higher level of uncompensated care. Those payments, which totaled $11.3 billion in 2011, are meant to offset the bills of the uninsured.
The Affordable Care Act phases out these payments. If most Americans are covered under the Affordable Care Act, after all, hospitals would presumably see a reduction in unpaid bills. They wouldn't need the supplemental payments anymore.
That was the thinking before the Supreme Court decision, at least. If a state opts out of the Medicaid expansion and does not extend coverage to those living below the poverty line, the math changes. The unpaid bills do not disappear, but the DSH dollars do. Barring an act of Congress, those supplemental funds will be largely phased out by 2020.
That's a big deal for hospitals, who already spend about $39.3 billion a year on uncompensated care, which makes up 5.8 percent of all expenses. Add on another $11 billion and hospitals would find themselves spending 27 percent more covering unpaid bills. It especially matters in states with more uninsured residents. In Texas, for example, the hospitals received $957 million in DSH payments last year.
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