Am I eligible? Why financial assistance policies vary drastically between states

Jacqueline Powers is an intern at the Lown Institute and undergraduate student at Tufts University. As an intern on the Hospital Billing & Collection Practices team, she studied state-level policies around financial assistance eligibility. 

Suppose you are an individual who makes $21,870 per year, or 150% of the federal poverty level (FPL), and have come to the hospital for treatment. Would you be eligible for financial assistance to help these expenses? It depends on where you live.

If you live in Rhode Island, your total cost would be covered, thanks to state legislation mandating that hospitals provide free care for those making up to 200% FPL. However, if you live in Arkansas, you are not guaranteed any financial assistance. 

Additionally, many states use other factors besides income to determine eligibility such as type of hospital, insurance status, residency, and type of services. For example, in Indiana, free care is only given to eligible individuals whose condition is so severe that a lack of medical attention would result in death or serious impairment. There is a clear variability among states in determining financial assistance policies. 

Health care services are expensive, and financial assistance policies play a role in whether an individual can afford care. However, there is no federal standard for eligibility based on income, and only some states have requirements of their own. That creates a patchwork of policies, with some states requiring more generous policies than others. For example, in order to qualify for discounted care in Connecticut, patients must be uninsured and have family income under 250% of the FPL. This is a low cutoff compared to other states such as California, Oregon, and Washington, all of which mandate free or discounted care for most individuals with an income less than 400% of the FPL.

What explains these differences in policies among states? One might think it’s because the cost of living and income levels are very different across the country. However, I am not convinced that this is the primary reason. According to Forbes, Hawaii is the state with the both the highest cost of living and least amount of disposable income in the country. To my surprise, Hawaii does not have any requirements for hospital financial assistance policies. 

A more stark comparison is between Massachusetts, which is ranked 2nd for the highest cost of living, and Oklahoma, which is ranked 47th. Massachusetts policy states that patients are eligible for free care if they make under 150% FPL and discounted care if they make below 300% of the FPL. Oklahoma also has a required discount for patients with incomes below 300% of the FPL if they are uninsured. It is shocking to me that two states with such different costs of living and income levels have the same cutoff for financial assistance. This signals to me that the cost of living is not the primary consideration in these policies and that states have other motivations. For one, political obstacles may preclude requirements for generous financial assistance in states where welfare is a divisive topic.   

I feel that there needs to be more pressure on states to create equitable financial assistance policies. Not providing financial assistance in hospitals pushes people away from accessing treatments, which can contribute to the progression of worse health outcomes that disproportionately impact low income individuals. Everyone should have the right to health care, and state financial assistance policies are an opportunity to expand health equity. States have the responsibility to keep their residents healthy no matter their ability to pay.

Written by Jacqueline Powers