The impact of Medicaid expansion on hospital closures

Medicaid expansion significantly decreased the number of people without insurance, and in turn may have prevented some cash-strapped hospitals from closing, according to a new study. 

Researchers from the University of Colorado School of Public Health compiled financial data on critical access hospitals reported between 2008 and 2016 and found that these facilities in states that expanded Medicaid were six times less likely (or 84% less likely) to close, according to data published in Health Affairs. 

Financial margins for these hospitals also improved by 33% in expansion states, according to the study. 

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Closure rates in both groups of states were similar until diverging circa 2012, the researchers found. This could coincide with a Supreme Court decision that year that made Medicaid expansion optional. There was also a significant number of closures in nonexpansion states in 2013, according to the study, as critical access hospitals expected disproportionate share hospital payments to be phased out. 

For-profit hospitals were also more likely to close than non-profit facilities, the study found. 

The findings add to the growing body of research that suggests Medicaid expansion was a significant financial boon for hospitals. By significantly decreasing the number of low-income patients without insurance, uncompensated care spending dropped, research showed. 

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The researchers warned that a rollback of Medicaid expansion could lead to additional rural hospital closures that could cripple access to care for patients in those areas. Increased travel time to another facility could worsen outcomes for people with critical needs, and closures would also likely mean a loss of skilled jobs in regions that need that work. 

The impacts are less pronounced in urban areas, the researchers said, as hospitals that close in those regions are typically of poorer quality. 

"In rural or smaller communities, hospital closures have a far greater impact because they not only affect the delivery of healthcare services and emergency care, but we also have to consider that these hospitals are the largest employer and often are pillars in those communities," Gregory Tung, Ph.D., an assistant professor in the School of Public Health and one of the study's authors, said in an announcement