The Poverty Premium: Dual-Eligible Patients and Healthcare Costs
24.9% of Medicare beneficiaries also qualify for Medicaid — a marker of poverty. How does this affect the hospitals they use?
What Does "Dual-Eligible" Mean?
A "dual-eligible" patient qualifies for both Medicare (typically for age or disability) and Medicaid (for low income). These are among the most vulnerable people in the healthcare system — often elderly, disabled, and poor simultaneously.
Hospitals that serve large dual-eligible populations tend to be safety-net institutions in lower-income communities. We split hospitals at the median and compared the two groups.
High vs. Low Dual-Eligible Hospitals
| Metric | High Dual-Eligible | Low Dual-Eligible |
|---|---|---|
| Number of Hospitals | 503 | 465 |
| Avg Charge per Discharge | $75,466 | $75,097 |
| Avg Markup over Medicare | 4.81× | 5.98× |
What the Data Shows
Lower Markups at Safety-Net Hospitals
Hospitals serving more dual-eligible (low-income) patients have an average markup of 4.81× compared to 5.98× at hospitals with fewer dual-eligible patients. That's a 24% higher markup at wealthier-area hospitals.
Similar Charges, Different Markups
Average charges are nearly identical ($75,466 vs $75,097), but the markup difference suggests hospitals in lower-income areas receive more Medicare reimbursement per discharge — possibly due to higher-acuity patients or area wage adjustments — while listing similar sticker prices.
The Takeaway
Contrary to what you might expect, hospitals in wealthier areas are more aggressive with pricing markups. Safety-net hospitals serving the poorest patients appear to be more restrained in their pricing — or at least, the gap between what they charge and what Medicare pays is smaller.
Methodology
Hospitals were split at the median dual-eligible percentage. "High dual-eligible" hospitals have above-median rates of patients qualifying for both Medicare and Medicaid. Markup is calculated as total charges divided by total Medicare payments per discharge. Data source: 2023 Medicare Provider Analysis and Review (MedPAR) file.