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Hospital Bottom Lines Saw Benefit in States Expanding Medicaid

October 11th, 2016

ANN ARBOR, MI – In states that expanded their Medicaid programs as part of the Affordable Care Act, the amount of care their hospitals provided to uninsured patients plummeted, according to a new study.

The article, published recently in Health Affairs, suggests one of the key parts of the Affordable Care Act worked as intended, allowing hospitals a chance to recoup more of the cost of care they provide instead of having to absorb it when low-income patients are unable to pay.

For the study, University of Michigan Institute of Healthcare Policy and Innovation researchers looked at hospital discharges in a sample of states that expanded Medicaid, finding that, in all, hospital stays by uninsured patients went down 50% between the end of 2013 and the middle of 2014. At the same time, hospital stays by patients with Medicaid went up 20%.

On the other hand, states that didn’t expand Medicaid after a Supreme Court decision made it optional continued with the same or higher demand for care from the uninsured.

"In expansion states, we see exactly what we would expect to happen after Medicaid became available to more people," lead author Sayeh Nikpay, PhD, MPH, said in a University of Michigan press release. "Even in these early months, the shift from uninsured to Medicaid contrasts sharply with the steady demand for uninsured care in non-expansion states. This has implications for the financial status of hospitals."

The researchers used the newly available hospital discharge payment source data from the Agency for Healthcare Research and Quality's HCUP Fast Stats program. Expansion states studied were Arizona, California, Colorado, Hawaii, Iowa, Kentucky, Minnesota, New Jersey, and New York, while the non-expansion states were Florida, Georgia, Indiana, Missouri, Virginia, and Wisconsin.

Among the findings were that Kentucky, where Medicaid enrollment has nearly doubled since expansion, showed a 13.5% point drop in uninsured hospital stays in just the first six months after expansion. In Georgia, meanwhile, where Medicaid was not expanded, uninsured hospital stays rose by seven percentage points in early 2014, according to the study.