PRWORA marked large-scale changes in health, immigration, and welfare policy in the United States. Patients, hospitals, and state and federal governments have all had a stake in PRWORA's enactment. An accurate monetary estimate of the effects of PRWORA on hospital uncompensated care due to changes in Medicaid coverage would be useful to policymakers as PRWORA periodically comes up for consideration of renewal, and as anecdotal evidence of an adverse financial impact on hospitals continues to mount.
We hypothesized that hospital uncompensated care expenditures would be greater in states with higher percentages of foreign-born residents, lower rates of insurance coverage, and higher percentages of teaching hospitals. Measured at the state level, hospital uncompensated care expenditures were not statistically significantly related to percentage foreign-born, percentage of teaching hospitals, or states' implementation decisions; in our model, higher uninsurance rates emerged as the only significant predictor of uncompensated hospital care expenditures. This finding suggests that efforts to reduce the number of people uninsured or underinsured would reduce hospitals' expenditures on uncompensated care. This implication reinforces claims that high rates of uninsurance in United States have negative effects, but does not directly address our original hypothesis about the immigrant eligibility provisions of PRWORA. As with other studies that have combined disparate data sources to assess the impact of PRWORA on the health or welfare of would-be beneficiaries [4
], data limitations posed a significant challenge to these analyses.
The proxy of percentage foreign-born may not have accurately captured the population of interest – legal immigrants arriving after August 22, 1996, who were no longer eligible for nonemergency Medicaid coverage. Using the foreign-born category from the Census data relies on the assumption that states with higher foreign-born populations would also have a greater number of legal immigrants whose eligibility for nonemergency Medicaid would be affected by PRWORA. However, the foreign-born noncitizen category used in Census data (defined as any person not born a citizen of the United States and not naturalized) includes categories of persons exempted from PRWORA's Medicaid cuts, such as asylum seekers and refugees. Given that PRWORA requires states that provide health services to report illegal immigrants to authorities, it is unlikely that accurate data on immigration status and date of entry into the United States can be collected in the health care setting. In addition, it is unlikely that any institutional review board would approve the collection of such data in present circumstances.
Because the main effect of PRWORA was to restrict Medicaid eligibility, thereby increasing demand for uncompensated care, the present analysis focused on state-level parameters linked to demand for medical care. Uncompensated care reimbursement pools, common in states with former all-payer rate-setting systems, led to increased uncompensated care expenditures throughout the 1990s. In a deregulated health care system, however, states tended to use these funds to expand Medicaid and/or Medicaid managed care, thus shifting the focus of the pools to reimbursement for charity care only [35
]. Because of the non-uniformity of states' approaches to uncompensated care pools, their limited use, and their changing roles over time, we did not include this factor in our final model.
A monetary estimate on a national, state, or hospital level of the financial impact of PRWORA remains difficult to ascertain due to data limitations. Ideally, such research would compare the costs before and after 1996 of the nonemergency care that hospitals provided (both as charity care and as bad debt) to the category of immigrants who lost nonemergency Medicaid eligibility due to the implementation of PRWORA. We would expect the extent and implications of this financial impact to vary according to both hospital characteristics and the populations served. Because a patient's immigration status is not recorded concomitantly with hospital resource use in any hospital, state, or federal database, it is not currently possible to isolate charity care and bad debt expenditures on nonreimbursed services for patients whose eligibility for Medicaid has been changed by PRWORA.
An additional complicating factor is the possibility that, as a result of PRWORA, hospitals may provide and bill for services as emergency services that previously were categorized as nonemergency services in order to secure Medicaid payment. Similarities in income-related eligibility criteria for emergency and nonemergency Medicaid would facilitate reclassification. Further research should examine the extent to which providers reclassify services.
Traditionally, safety net hospitals have been supported though public funds, such as disproportionate-share hospital (DSH) payments. The Medicaid DSH payment is based on the assumption that certain hospitals, in addition to providing care to Medicaid enrollees, also serve indigent persons who are ineligible for Medicaid. However, there are some indications that public support mechanisms to hospitals may be in jeopardy [36
]. First, DSH payments are large and repeatedly become targets for budget cuts by federal and state governments. As a result of provisions in the BBA, for example, it has been estimated that federal spending on Medicaid DSH will decrease by 11%, or $5.8 billion, during the period from 1998 through 2002. Since more Medicaid beneficiaries are being cared for in private facilities, public safety net hospitals may be affected by both competition for fee-for-service patients and decreases in overall DSH allotments [37
]. Finally, safety net hospitals typically use Medicaid revenues to help fund uncompensated care; decreases in Medicaid reimbursements may, therefore, further impede hospitals' ability to provide services to the uninsured [38
Existing studies of trends in uncompensated hospital care expenditures have focused primarily on supply-side covariates, such as uncompensated care pools, Medicare and Medicaid DSH payments, and the degree of competition in the local health care marketplace [25
]. While a focus on such hospital characteristics has helped to elucidate the factors that affect uncompensated care at the hospital level, the present study sought to examine the impact of the PRWORA legislation by identifying state-level characteristics affecting total hospital uncompensated care per state from 1994 to 1999. Because data used for the regression model came from multiple sources, comprehensive year-by-year figures from 1994 through 1999 were available for all factors in the model only at the state level. Because PRWORA gave states the option of changing Medicaid coverage, state-level information is useful in understanding how PRWORA was implemented across the United States. However, to better assess the effects of PRWORA on hospitals, detailed hospital-specific information, at least at the level of metropolitan statistical area (MSA), would be needed on the immigration status of populations served. Data limitations currently hamper efforts to obtain a monetary estimate of hospitals' financial losses due specifically to PRWORA. To better quantify the impact of health policy regulations on health care providers, better data sources, particularly at the MSA level, are needed.