Medicaid Expansion Impact: Higher Revenues, Fewer Uninsured Patients, For Hospitals In States That Expanded Medicaid, Report Finds

For hospitals in the states that expanded Medicaid, the health insurance program for low-income Americans, the program’s broadening has been a boon for business, a new report suggests. Alongside higher demand and revenues from patients, these hospitals have also seen a reduction in the number of uninsured patients that seek care but cannot pay.

The report, published by the Kaiser Family Foundation, looked at Ascension Health, a Catholic healthcare system that has 131 hospitals in 16 states and Washington, D.C. Some of those states were ones that opted to broaden Medicaid, as allowed by the Affordable Care Act, to include a larger pool of low-income patients. Some states, however, chose not to expand, and the differences in subsequent healthcare costs between the two groups have been substantial.

The costs of charity care -- medical services that essentially have to be given away -- fell by 40 percent between 2013 and 2014 at Ascension hospitals in states that expanded Medicaid. In states that did not, those costs fell by only 6 percent. One reason could be that in states with expanded Medicaid, the number of visits from people who did not have insurance decreased by 32 percent. In nonexpansion states, those visits dropped by a mere 4 percent.

Revenues from Medicaid at hospitals in states where the program expanded also grew by 8.2 percent from between 2013 and 2014. In nonexpansion states, Medicaid revenue dropped by 9.4 percent. So far, 29 states plus the District of Columbia have expanded or are starting to expand Medicaid, Families USA says. Of the 21 states that have not expanded Medicaid, Alaska and Utah are the only states currently considering doing so.

The Kaiser study corroborated other findings about the benefits to states -- in terms of cost and access to healthcare -- of expanding Medicaid. In April, a study published by the Robert Wood Johnson Foundation found states that had expanded Medicaid saved more money and had higher revenues, without cutting back on available health services. And in June 2013, a Rand Corp. study published in the journal Health Affairs concluded that “in terms of coverage, cost and federal payments, states would do best to expand Medicaid,” which is called an effective option to bring health insurance coverage to more people.