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Hospitals as Insurers of Last Resort

Author

Listed:
  • Craig Garthwaite
  • Tal Gross
  • Matthew J. Notowidigdo

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.

Suggested Citation

  • Craig Garthwaite & Tal Gross & Matthew J. Notowidigdo, 2018. "Hospitals as Insurers of Last Resort," American Economic Journal: Applied Economics, American Economic Association, vol. 10(1), pages 1-39, January.
    • Handle: RePEc:aea:aejapp:v:10:y:2018:i:1:p:1-39
    Note: DOI: 10.1257/app.20150581
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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