Medicaid expansion cuts uncompensated care costs

In states that expanded their Medicaid programs under the Affordable Care Act, uncompensated care costs are down and revenues are up compared to those that didn’t.

Fredric Blavin, Ph.D., of the Urban Institute, reviewed data from the Centers for Medicare & Medicaid Services’ Health Care Cost Report Information System and the American Hospital Association’s Annual Survey for a period ranging from 2011 to 2014, according to research published in the Journal of the American Medical Association. The data featured between 1,200 and 1,400 hospitals per fiscal year across 19 expansion states and 2,200 to 2,400 per fiscal year across 25 non-expansion states.

Across the expansion states, mean annual uncompensated care costs fell $2.8 million per hospital, while annual Medicaid revenues increased $3.2 million. Excess margins increased for hospitals in expansion states as well, according to Blavin, but there was no significant difference between hospitals in expansion and non-expansion states in operating margins.  

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Blavin concluded that though the results showed significant financial improvements for hospitals in states where Medicaid was expanded, more research is needed to assess trends in the long term.

This research comes on the heels of a study published in August in the journal Health Affairs that found steep drops in uncompensated care in states that expanded the program, FierceHealthFinance previously reported, as well as a March study finding the program’s expansion boosted savings for states along with revenues for health insurers.

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