Uncompensated Care Decreased At Hospitals In Medicaid Expansion States But Not At Hospitals In Nonexpansion States

Abstract

One pillar of the Affordable Care Act (ACA) was its expected impact on the growing burden of uncompensated care costs for the uninsured at hospitals. However, little is known about how this burden changed as a result of the ACA's enactment. We examine how the Affordable Care Act (ACA)'s coverage expansions affected uncompensated care costs at a large, diverse sample of hospitals. We estimate that in states that expanded Medicaid under the ACA, uncompensated care costs decreased from 4.1 percentage points to 3.1 percentage points of operating costs. The reductions in Medicaid expansion states were larger at hospitals that had higher pre-ACA uncompensated care burdens and in markets where we predicted larger gains in coverage through expanded eligibility for Medicaid. Our estimates suggest that uncompensated care costs would have decreased from 5.7 percentage points to 4.0 percentage points of operating costs in nonexpansion states if they had expanded Medicaid. Thus, while the ACA decreased the variation in uncompensated care costs across hospitals within Medicaid expansion states, the difference between expansion and nonexpansion states increased substantially. Policy makers and researchers should consider how the shifting uncompensated care burden affects other hospital decisions as well as the distribution of supplemental public funding to hospitals.

Changes in hospital service demand, cost, and patient illness severity following health reform

“…In particular, levels of use, and therefore aggregate expense, are likely to increase for Medicaid in expansion states. Uncompensated care delivery costs for hospital inpatient and ED services will decline on the basis of our findings, consistent with Dranove and colleagues …”

Hospital uncompensated care and patient experience: An instrumental variable approach

“…Consistent with prior research, the results in Table suggest that the Medicaid expansion was strongly correlated with a reduction in uncompensated care . The coefficients on the difference‐in‐differences estimators in Table , Expand*2014 and Expand*2015, are negative and statistically significant at the 0.01 level.…”

Heterogeneous Effects of the Aca Medicaid Expansion on Hospital Financial Outcomes

“…Although in most states the Medicaid expansion went into effect on January 1, 2014, six states took advantage of a provision in the law allowing them to begin implementing the ACA expansion earlier; seven other states did not expand eligibility until mid‐2014 or later. Previous studies excluded some or all of the early and/or late expansion states, presumably because of the difficulty in defining the “pre” and “post” periods (Blavin ; Camilleri ; Dranove, Garthwaite, and Ody ). We keep early expansion states in the analysis in light of evidence that in these states the coverage gains before 2014 were quite limited (Sommers, Kenney, and Epstein ).…”

“…The only published study to date to examine the impact of Medicaid expansion on hospital margins finds only marginally significant improvements in operating margins in expansion states relative to nonexpansion states (Blavin ). That study, like others focusing exclusively on changes in hospital uncompensated care (Camilleri ; Dranove, Garthwaite, and Ody ), is based on a simple comparison of states that did and did not implement the Medicaid expansion in January 2014. Such an approach ignores important heterogeneity among expansion states in the extent to which the Medicaid expansion increased eligibility levels and therefore increased insurance coverage.…”