Hospital Financial Pressures and the Health of the Uninsured: Who Gets Hurt? The Case of California

Abstract

The US relies on charitable medical care to serve the uninsured, most of which is offered by hospitals that act as providers of last resort and that constitute the safety net. This paper analyzes the effect that hospital financial stress has on the health of the uninsured. In particular we look at managed care. Managed care penetration has often been blamed for increasing financial pressures on hospitals and previous work has showed that safety net hospitals have been affected more severely by it. Our findings are threefold: first, we find that managed care financial pressures encourage charity care patients to concentrate in public hospitals. Second, we fins that these hospitals, in turn, see a decrease in their quality of care in areas where managed care penetration is stronger. Finally we also find that managed care diffusion has a negative effect on the quality of care received by the uninsured - as measured by the probability of dying after a heart attack - and of those that go to government hospitals.