The effect of Affordable Care Act Medicaid expansion on hospital revenue

Abstract

Prior research has found that in states which expanded Medicaid under the Affordable Care Act, hospital Medicaid revenue rose sharply, and uncompensated care costs fell sharply, relative to hospitals in nonexpansion states. This suggests that Medicaid expansion may have been a boon for hospital revenue. We conduct a difference-indifferences analysis covering the first four expansion years (2014-2017) and confirm prior results for Medicaid revenue and uncompensated care cost, over this longer period. However, we find that hospitals in expansion states showed no significant relative gains in either total patient revenue or operating margins. Instead, the relative rise in Medicaid revenue was offset by relative declines in commercial insurance revenue. In subsample analyses, we find higher revenue and margins for rural hospitals in expansion states, little change for small urban hospitals, and a revenue decline for large urban hospitals.

Financial impacts of the Medicaid expansion on community health centers

“…In our primary analysis, we used full‐expansion and non‐expansion states, and excluded substantial and mild expansion states that partially expanded Medicaid to childless adult before 2014. For sensitivity analysis, we included substantial and mild expansion states in our sample (see Table 1 and Appendix Table A2 in Supporting information) 14 . Additionally, we excluded all health centers outside of 50 US states and DC.…”

The ACA Medicaid Expansions and Opioid Mortality: Is There a Link?

“…As a result, the differential increases in the proportion of individuals with any health insurance in expansion relative to nonexpansion states have been modest. Between 2013 and 2017, the proportion of nonelderly individuals with any health insurance rose by only 1.5 percentage points more in expansion states than in nonexpansion states (Moghtaderi et al, 2020).…”

ACA Medicaid Expansions and Maternal Morbidity

“…Previous research has shown that the Medicaid expansion reduced uncompensated care costs in hospitals, and that this effect was larger among hospitals that treat a disproportionate share of low-income individuals (Dranove et al 2017;Camilleri 2018;Guth and Ammula 2021). Other studies find that the expansion is associated with improved hospital financial performance and improved operating margins, although the magnitude of the improvements may vary among urban and rural hospitals (Moghtaderi et al 2020;Rhodes et al 2020;Blavin and Ramos 2021;Guth and Ammula 2021). There is not much literature on how hospitals use the savings; however, Tarazi (2020) shows that the expansion is associated with improvements in nurse staffing ratios.…”

“…Studies have shown that the ACA Medicaid expansions led to increases in Medicaid enrollment among women of reproductive ages, and if the new access to care results in the identification and management of chronic health conditions, women may enter pregnancy in better health (Johnson et al 2018, Clapp et al, 2018Geiger et al, 2021;Lyu and Wehby 2021). In addition, there is evidence that the ACA expansions have improved hospitals' financial positions (Dranove et al 2017;Moghtaderi et al 2020). Whether the financial improvements translate to improved health outcomes is still unknown; however, one study finds that ACA expansion is associated with improvements in nurse staffing ratios and decreases in readmission rates (Tarazi 2020).…”