An increase in Minnesotans with health insurance hasn't decreased the uncompensated care provided by the state's hospitals, but it has caused a shift from outright charity care to bad debt from insured patients who couldn't afford their medical bills.

The total amount of uncompensated care by hospitals increased from $573 million in 2013 to $589 million in 2014, despite a 26 percent drop in charity care for the uninsured.

Many previously uninsured Minnesotans now have low-cost plans that are affordable — until they get sick and discover high deductibles they have to pay out of pocket, said Lawrence Massa, president and chief executive of the Minnesota Hospital Association. "As we change the dynamic of who pays for health care, it's taken a while for regular Minnesotans to build a surplus into their budgets to take care of those kinds of things."

That surge in patients with bad debt added to a 4.6 percent increase in what the hospital association reports as its "community benefit" — the total amount of unreimbursed support they provide to the state.

The total community benefit was $4.3 billion in 2014, the first year in which a mandate under the Affordable Care Act required Americans to have health insurance.

Benefits provided by the hospitals included a broad range of services — care for the needy, public skin cancer checks and flu shot clinics, medical research, and training that sharpened the skills of doctors and nurses.

Specific examples in Thursday's report included exercise options provided by Rice Community Hospital to the diverse Willmar community, emotional support provided by Hennepin County Medical Center to new mothers, and visits provided by HealthEast paramedics to mentally ill patients after hospital discharges. This type of community service amounted to $402 million — about one-tenth of the total community benefit.

Roughly $2.5 billion, the association said, was due to hospitals absorbing the costs of serving patients covered by government Medicare and Medicaid programs, which reimburse at well below hospitals' requested rates. Critics question the inclusion of such "underfunding" as a community benefit, because hospitals balance out such losses by charging privately insured patients more.

Massa agreed that some of that cost is passed along, but he said it is still an important number to report — especially to lawmakers who help set payment rates in Medicare and Medicaid.

"You don't have many other areas of economic endeavor where your large payers … pay you less than the cost of delivering the care," he said. "It wouldn't be sustainable if there wasn't a cost shift, that's for sure."

Massa said he is concerned about the rise in bad debt. Writing off the cost of a needy patient as upfront charity is more efficient and less stressful than trying to collect from someone who's broke and can't pay insurance deductibles.

"Many of our members are looking at [new] charity care policies that don't necessarily have being uninsured as the trigger," he said.

The Affordable Care Act also challenged hospitals to assess the needs of their communities and to prioritize them. The Rice hospital's project is an example. After conducting health assessments, it found Somali and other women in Willmar were out of shape and realized they didn't have a nearby place to exercise where they felt comfortable. The solution was a women-only fitness class that taught participants calisthenics and soccer.

Jeremy Olson • 612-673-7744