Does the ACA Medicaid Expansion Affect Hospitals’ Financial Performance?

Abstract

This paper examines the effects of states’ Medicaid expansion under the Affordable Care Act (ACA) on hospitals’ financial performance in the United States. Extending previous studies that primarily focus on the immediate short-term impact of the ACA's Medicaid expansion, we investigate if the fiscal effects persist over a longer-term and if the fiscal effects vary across different hospitals. Using panel data on hospitals from 2011 to 2018, we find that hospitals’ financial performance, as gauged either by Medicaid net revenue and uncompensated care cost or by multiple profitability measures, improves in Medicaid expansion states, and the positive effects continue over time. In addition, there are significant heterogeneities in the fiscal effects across different hospitals. Hospitals’ profitability improves the most in the public sector, rural areas, and less wealthy counties.

Impact of Medicaid Expansion on Trauma Patients at Extreme Risk of Mortality: A Time-Series Analysis

“…As demonstrated by previous research, Medicaid expansion can lead to increased Medicaid net revenue, and enhanced profitability for hospitals. 4 These financial gains can have a cascading effect, enabling healthcare facilities to invest in improved infrastructure, equipment, and staffing, which ultimately benefits the broader patient population, including high-risk trauma patients. In addition, the effect of insurance on the survival of patients with severe trauma remains inconclusive in the existing literature.…”

“…3 This expansion generates positive externalities within the healthcare system, as it not only targets the direct beneficiaries but also significantly enhances hospitals' financial stability. 4 These benefits extend beyond individual hospitals to influence the overall healthcare landscape, including factors like access to care and healthcare quality. 5 The initial enactment of ACAME required states to implement this expansion from January 1, 2014.…”

“…1,2,8 Studies have demonstrated that Medicaid expansion has led to notable improvements in various healthcare aspects, including enhanced access to care, post-discharge rehabilitation services, and hospital financial stability. 4,[9][10][11] Nonetheless, the existing literature on the impact of ACAME on trauma in-hospital mortality presents conflicting findings. 1,2 To address this research gap, quasi-experimental modeling, specifically utilizing interrupted time-series analysis (ITSA), was used.…”

Effects of Affordable Care Act on uninsured hospitalization: Evidence from Texas

“…2,3 The main 2014 provisions of the Affordable Care Act (ACA), the establishment of individual Marketplace exchanges and state Medicaid expansions, increased insurance coverage, especially for low-income individuals, and decreased the number of uninsured hospital stays, and could have thereby reduced a hospitals' share of uncompensated care and financial strain. [4][5][6][7][8][9][10] The purpose of this paper is to examine the effect of the national components of the ACA health insurance expansion on the rate of uninsured and privately insured discharges in Texas. We used the universe of discharge data from 2011 to 2019 and implemented a difference-in-difference (DD) design, with the differences coming from the time of the implementation of the ACA and the pre-ACA hospital uninsured discharge rate.…”

“…Unfortunately, hospital profit margins are small and high levels of uncompensated care can have substantial negative consequences for hospitals, especially for rural hospitals, including the decision to close the hospital 2,3 . The main 2014 provisions of the Affordable Care Act (ACA), the establishment of individual Marketplace exchanges and state Medicaid expansions, increased insurance coverage, especially for low‐income individuals, and decreased the number of uninsured hospital stays, and could have thereby reduced a hospitals' share of uncompensated care and financial strain 4–10 …”