Medicaid expansion associated with increased Medicaid revenue, decreased uncompensated care costs

October 11, 2016

In a study appearing in the October 11 issue of JAMA, Fredric Blavin, Ph.D., of The Urban Institute, Washington, D.C., estimated the association between Medicaid expansion in 2014 and hospital finances by assessing differences between hospitals in states that expanded Medicaid and in states that did not expand Medicaid.

The Affordable Care Act expanded Medicaid eligibility for millions of low-income adults. The choice for states to expand Medicaid could affect the financial health of hospitals by decreasing the proportion of patient volume and unreimbursed expenses attributable to while increasing revenue from newly covered patients. However, whether Medicaid expansion has been associated with improved hospital profits is uncertain, particularly for hospitals that received generous support from state or local government for providing uncompensated care.

This study included data from the American Hospital Association Annual Survey and the Health Care Cost Report Information System from the U.S. Centers for Medicare & Medicaid Services for nonfederal general medical or surgical hospitals in fiscal years 2011 through 2014. The sample included between 1,200 and 1,400 hospitals per fiscal year in 19 states that expanded Medicaid in early 2014 and between 2,200 and 2,400 hospitals per fiscal year in 25 states that did not expand Medicaid (with sample size varying depending on the outcome measured).

Expansion of Medicaid was associated with a decline of $2.8 million in average annual uncompensated care costs per hospital. In addition, hospitals in states with Medicaid expansion experienced a $3.2 million increase in average annual Medicaid revenue per hospital, relative to hospitals in states without Medicaid expansion. Medicaid expansion was also significantly associated with improved excess margins (a profitability indicator that includes all other sources of income, not just those from patient care) (1.1 percentage points), but not improved operating margins.

"For states still considering Medicaid expansion, these findings suggest that expansion may be associated with improvements in hospitals' payer mix and overall financial outlook. However, changes in financial outcomes for hospitals in any specific state will likely depend on a host of factors, such as the state's pre-ACA income and coverage distribution, Medicaid eligibility thresholds, Medicaid reimbursement levels, and the subsidies hospitals receive for providing uncompensated care," the author writes.

"Further study is needed to assess longer-term implications of this policy change on hospitals' overall finances."

Explore further: Study examines financial losses for inpatient care of children with Medicaid

More information: JAMA, DOI: 10.1001/jama.2016.14765

Related Stories

Study examines financial losses for inpatient care of children with Medicaid

September 12, 2016
Freestanding children's hospitals had the largest financial losses for pediatric inpatients covered by Medicaid, suggesting hospitals may be unlikely to offset decreased Disproportionate Share Hospital (DSH) payments from ...

Medicaid expansion increased Medicaid enrollment among liver transplant recipients

July 26, 2016
Researchers have found that Medicaid expansion increased Medicaid enrollment among people who received liver transplants funded by commercial insurance. The findings are published inLiver Transplantation.

Medicaid expansion brought across-the-board relief for Michigan hospitals, study finds

June 21, 2016
It happened fast. It happened in nearly every hospital in the state of Michigan. And it didn't come with dreaded side effects.

Study finds Medicaid expansion did not increase emergency department use

August 9, 2016
George Washington University (GW) researchers published a Health Affairs study finding that the expansion of Medicaid insurance coverage in the Patient Protection and Affordable Care Act (ACA) did not increase hospital emergency ...

Expanding state Medicaid stems growth of uncompensated care

July 8, 2015
On the heels of the recent U.S. Supreme Court decision that upheld a key part of the Affordable Care Act, new research from the University of Michigan Institute for Healthcare Policy and Innovation offers the first comprehensive ...

Hospitals in states that refuse Medicaid expansion shoulder billions in uncompensated care costs

June 23, 2015
Twenty-one states have opted not to expand Medicaid under the Affordable Care Act (ACA), arguing that the expansion would be too expensive. But according to new research, the cost to hospitals from uncompensated care in those ...

Recommended for you

Air pollution linked to poorer quality sperm

November 22, 2017
Air pollution, particularly levels of fine particulate matter (PM2.5), is associated with poorer quality sperm, suggests research published online in Occupational & Environmental Medicine.

Sunrise and sunset guide daily activities of city-dwellers

November 21, 2017
Despite artificial lightning and social conventions, the dynamics of daylight still influence the daily activities of people living in modern, urban environments, according to new research published in PLOS Computational ...

Older men need more protein to maintain muscles

November 21, 2017
The amount of protein recommended by international guidelines is not sufficient to maintain muscle size and strength in older men, according to a new study.

Exercising and eating well are greater contributors to health than standing at work

November 21, 2017
By now you've probably heard the edict from the health community: Sitting is the new smoking. Perhaps you've converted to a standing desk, or maybe you have a reminder on your phone to get up once an hour and walk around ...

Motorcycle crashes cause five times as many deaths as car accidents, six times the health costs

November 20, 2017
Motorcycle accidents are costly in terms of lives and health care costs. Compared with car accidents, motorcycle accidents cause 3 times the injuries, 6 times the medical costs and 5 times the deaths, found new research in ...

Dog ownership linked to lower mortality

November 17, 2017
A team of Swedish scientists have used national registries of more than 3.4 million Swedes aged 40 to 80 to study the association between dog ownership and cardiovascular health. Their study shows that dog owners had a lower ...

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.