This election season has seen relatively little campaigning on health care reform. Short of the occasional cry to "repeal Obamacare" or the offhand complaint about how much health care costs, there's been relatively little focus on how reform, of health care in general, must be addressed in the next Presidential administration.
What little news there is seems to focus on the exchanges, as I've noted over at other venues. Almost no attention is being paid to Medicaid, or its expansion as part of the Affordable Care Act. A newly released study in JAMA focuses on how the Medicaid expansion affected hospital finances in the US, though, and it's worth our time.
IMPORTANCE The Affordable Care Act expanded Medicaid eligibility for millions of low-income adults. The choice for states to expand Medicaid could affect the financial health of hospitals by decreasing the proportion of patient volume and unreimbursed expenses attributable to uninsured patients while increasing revenue from newly covered patients.
OBJECTIVE To estimate the association between the Medicaid expansion in 2014 and hospital finances by assessing differences between hospitals in states that expanded Medicaid and in those states that did not expand Medicaid.
DESIGN AND SETTING Observational study with analysis of data for nonfederal general medical or surgical hospitals in fiscal years 2011 through 2014, using data from the American Hospital Association Annual Survey and the Health Care Cost Report Information System from the US Centers for Medicare & Medicaid Services. Multivariable difference-in-difference regression analyses were used to compare states with Medicaid expansion with states without Medicaid expansion. Hospitals in states that expanded Medicaid eligibility before January 2014 were excluded.
EXPOSURES Medicaid expansion in 2014, accounting for variation in fiscal year start dates.
MAIN OUTCOMES AND MEASURES Hospital-reported information on uncompensated care, uncompensated care as a percentage of total hospital expenses, Medicaid revenue, Medicaid as a percentage of total revenue, operating margins, and excess margins.
I've made the argument, many times before, that Medicaid and the Medicaid expansion have benefits both to recipients and to society at large. This study, however, focused on how the Medicaid expansion affected hospital finances. It looked at differences between hospitals in states where Medicaid expanded and states where it did not. Researchers used data in fiscal years 2011 through 2014 from the American Hospital Association Annual Survey as well as data from the CMS's Health Care Cost Report Information System. They employed a multivariable difference-in-difference analysis.
The main outcomes of interest were uncompensated care, both as a total amount and as a percentage of total hospital expensed, as well as Medicaid revenue, operating margins, and excess margins (which are, evidently, an indication of profitability that includes more sources of income than just patient care).
The nineteen states that expanded Medicaid included between 1200 and 1400 hospitals (depending on reported outcome), while the 25 states that did not expand Medicaid included between 2200 and 2400 hospitals. Hospitals in states where Medicaid expanded saw a decline in uncompensated care of $2.8 million on average. They also saw an average annual increase of $3.2 million in Medicaid revenue, Excess margins went up 1.1%, while operating margins remained relatively steady.
Clearly, hospitals in states that expanded Medicaid saw a significant increase in Medicaid revenue, along with decreases in uncompensated care. This translated into improved profit margins compared to hospitals in states without the Medicaid expansion.
Of course, this is just an observational study, with plenty of caveats. Many things are clearly associated with hospital finances beyond the Medicaid expansion. It's also possible that confounders associated with the political and economic climate in states that choose to expand Medicaid or not could be the real drivers here. But as we debate policy as to whether it's "worth it" to expand Medicaid, it's worth nothing that the data arguing that it might be bad for hospitals not only isn't lacking, it's somewhat refuted.