The insurance–readmission paradox: Why increasing insurance coverage may not reduce hospital‐level readmission rates

The Affordable Care Act has made hospital readmissions a major public policy target by tying Medicare hospital payments to readmission rates for certain diseases. Since then, debate has spiked over the factors contributing to hospital readmissions, with particular attention being paid to the impact of socioeconomic status and access to care. The Massachusetts healthcare reform of 2006 is a useful natural experiment to help disentangle some of these effects. Although reform did little to change patients’ income, education, health literacy, or other determinants of socioeconomic status, it did dramatically reduce uninsurance rates. State-wide uninsurance rates dropped from 8.4% prereform to 3.4% postreform. Most important, a gain in insurance appeared to translate to genuine improvements in access to outpatient and preventive care. Massachusetts residents postreform were more likely to report a usual source of care, were more likely to have had outpatient office visits, and less likely to use the emergency department. Thus, the 2006 Massachusetts health reform legislation appears to have genuinely increased access both to insurance and to outpatient care, while reducing the need for preventable hospital-based care. Contrary to popular belief, patients without insurance have low unadjusted readmission rates for most conditions, often even lower than rates among those who have private insurance, perhaps because uninsured patients tend to be younger and healthier than the general population, or perhaps because they avoid costly healthcare services such as hospitalizations and rehospitalizations. A priori, it is therefore possible that obtaining insurance would encourage such patients to seek care, increasing readmission rates. On the other hand, access to insurance might increase use of outpatient preventive and follow-up care and treatments that would reduce readmission risk. A recent study by Lasser et al. found that, on a patient level, healthcare reform was associated with fairly minimal changes in readmission rates in Massachusetts, compared with trends in states not adopting health insurance reform. The authors further found that there was no improvement in readmission rates among Hispanic and black patients in Massachusetts compared with other states, nor was there differential improvement in counties with the highest baseline uninsurance rates compared to other Massachusetts counties. The question raised by Chen et al. in this issue of the Journal of Hospital Medicine, however, is whether the Massachusetts reform affected hospital-level aggregate readmission rates, not individual patient-level risk of readmission. Because public policy regarding readmissions is directed at hospitals, not patients, a hospital-level examination can shed light on likely implications for hospitals of new insurance gains prompted by the Affordable Care Act. Some commentators have expressed concern that payment penalty programs for excess readmissions may harm safety-net hospitals. Although uninsured patients may have low readmission rates, hospitals with high proportions of uninsured patients (safety-net hospitals) tend to have slightly higher readmission rates than other hospitals, probably because they also have higher proportions of high–readmission-risk Medicaid patients. Reducing the rate of uninsurance at these hospitals could theoretically have a number of different hospital-level effects. Patients obtaining insurance might elect to seek care elsewhere, changing the distribution of patients among hospitals, and potentially affecting readmission rates. Hospitals might be more prone to readmit insured patients, increasing their readmission rate if more of their patients gain insurance. They might use new revenue from newly insured patients to provide better care-coordination services, potentially reducing readmission risk, or as happened in Massachusetts, safety-net hospitals may find themselves unexpectedly losing revenue because of elimination of other subsidies, potentially reducing their ability to provide care transition services. Examining the effect of health insurance reform on hospital readmission rates empirically, Chen et al. find that readmission rates rose 0.6 percentage points in the group of hospitals with the highest prereform rates of uninsurance, but that after risk adjustment for age, gender, race, and comorbidity, there was no significant change relative to other hospitals. What accounts for these results? One possibility is that some patients gaining health insurance who previously received care at safety-net hospitals began to seek care at other institutions, but that the redistribution of patients *Address for correspondence and reprint requests: Leora Horwitz, MD, Department of Population Health, 550 First Avenue, TRB, Room 607, New York, NY 20016; Telephone: (646) 501-2685; Fax: (646) 501-2706; E-mail: leora.horwitz@nyumc.org