EMTALA Passes as Unfunded Mandate, Enabling Insurance Industry to Shift Emergency Care Costs to Hospitals

President Reagan signs the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA), which includes the Emergency Medical Treatment and Active Labor Act (EMTALA) requiring hospitals with emergency departments to screen and stabilize any patient regardless of ability to pay. While framed as protection against “patient dumping,” the law creates an unfunded mandate that allows insurers to avoid covering emergency care costs while hospitals absorb uncompensated care expenses.

EMTALA emerges after investigative reporting reveals that hospitals are transferring unstabilized patients to public hospitals based on inability to pay, sometimes resulting in patient deaths. The law prohibits such transfers and requires emergency departments to provide a medical screening examination and stabilizing treatment before transfer or discharge. However, Congress provides no dedicated funding mechanism to cover these mandated services.

The insurance industry benefits significantly from EMTALA’s structure. By requiring hospitals to provide emergency care without corresponding payment requirements for insurers, the law externalizes costs from private payers to healthcare providers. Insurers can deny coverage for emergency visits they deem “not emergent” in retrospect, leaving hospitals to absorb losses or pursue collections from uninsured patients.

Hospitals respond to unfunded EMTALA obligations by increasing prices for insured patients, creating a cost-shifting spiral that drives up premiums. Emergency departments become the default primary care provider for uninsured Americans, providing inefficient and expensive care for conditions better treated in lower-cost settings. The law’s “prudent layperson” standard, intended to protect patients seeking emergency care, is routinely circumvented by insurers who deny claims after emergency stabilization.

EMTALA exemplifies how superficially beneficial healthcare reforms can be structured to protect industry profits while imposing costs on providers and patients. The law addresses a visible problem—patient dumping—while creating invisible cost transfers that benefit insurers. By declining to fund the mandate it creates, Congress ensures that the healthcare system’s fundamental dysfunction—the gap between coverage and access—continues unaddressed while appearing to protect vulnerable patients.