Hospitals as Insurers of Last Resort
12:00 pm
1:00 pm
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4th Floor Conference Room
Tal Gross, PhD, Assistant Professor
Columbia Mailman School of Public Health, Departme
Department of Health Policy and Management
Open to the Columbia Community

(Joint work with Craig Garthwaite and Matt Notowidigdo)

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 across- and within-state variation in health insurance coverage rates, we find that each additional uninsured person costs hospitals approximately $600. That increase in costs is concentrated in private, non-profit hospitals with an emergency department (ED). For-profit hospitals and hospitals without an ED are largely unaffected. We next study how the burden of providing uncompensated care is shared across hospitals. To do so, we focus on the closure of one hospital in a local market. Using an event-study framework, we find that hospital closures increase the uncompensated care costs of nearby hospitals, with total uncompensated care in the local area remaining largely unchanged. Taken together, our results demonstrate that private, non-profit hospitals are "insurers of last resort" - their finances depend on the demand and supply of uncompensated care in the local market.


Dahlia Rivera