It's because in addition to the reimbursement, hospitals are paid a bonus fee by US taxpayers called a DSH to subsidize the subsidies. This serves to incentivize providers not to drop Medicare/Medicaid patients and also covers up the losses incurred.

More info: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Paymen...

Good commentary about upcoming changes that endanger these programs: http://www.modernhealthcare.com/article/20170626/NEWS/170629...