ECONOMIC REPORT OF THE PRESIDENT

that the introduction of Medicare led to large reductions in exposure to high
out-of-pocket medical costs among individuals over the age of 65.
Recent research indicates that the ACA’s major coverage provisions
are having similar beneficial effects on financial security. Research using
survey data show that the share of families reporting problems paying medical
bills has fallen substantially since 2013, with particularly large reductions
for low- and moderate-income adults (Shartzer, Long, and Anderson 2016).
Studies using data from consumer credit reports to compare states that have
and have not expanded Medicaid found similar improvements in financial
security, including reductions in the amount of debt sent to a collection
agency and improvements in credit scores (Dussault, Pinkovskiy, and Zafar
2016; Hu et al. 2016). The magnitude of these improvements is substantial;
Hu et al. (2016) estimate that state Medicaid expansions reduce the amount
of debt sent to collection by between $600 and $1,000 per person gaining
coverage under expansion.
Lower Uncompensated Care Costs
While the most salient benefits of expanded insurance coverage
accrue to the newly insured, expanding insurance coverage also has implications
for other participants in the health care system. Uninsured individuals
still receive some medical care, and when they do so, they are often unable
to pay for that care; Coughlin et al. (2014) estimated that health care providers
delivered roughly $1,000 in uncompensated care per uninsured person
in 2013, costs that must then be borne either by the health care provider
itself or by some other entity. Correspondingly, recent research has emphasized
that one important consequence of expanding insurance coverage is
to reduce the amount of uncompensated care that health care providers
deliver (Garthwaite, Gross, and Notowidigdo 2015; Finkelstein, Hendren,
and Luttmer 2015).
Recent trends provide strong evidence that the expansion in insurance
coverage driven by the Affordable Care Act is, as expected, driving substantial
reductions in uncompensated care. Figure 4-14 uses data from hospitals’
cost reports to the Centers for Medicare and Medicaid Services to examine
trends in uncompensated care. Nationwide, these data show that uncompensated
care fell by more than a quarter as a share of hospital expenses
from 2013 to 2015. Had uncompensated care as a share of hospital expenses
remained at its 2013 level, hospitals would have delivered an additional $10.4
billion of uncompensated care in 2015. The reductions in uncompensated
care since 2013 have been concentrated in Medicaid expansion states, likely
both because expansion states have seen larger coverage gains and because
the low-income uninsured individuals targeted by Medicaid expansion were
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