Medicaid Expansion And What It Means For The States That Opted For It

Medicaid expansion has affected hospitals’ finances. This is according to research found in a study conducted by the Urban Institute. The data used was collected from the American Hospital Association and CMS. What was founded in this study shows that states’ decisions to expand Medicaid will have major implications on a hospital’s finances. Additionally, this will affect their ability to recover from the COVID-19 pandemic.

What Was Found In the Study

For the analysis, hospitals in 25 states that had expanded Medicaid, and 19 non-expansion states; were included. 38 states, as well as Washington, DC; have expanded their Medicaid. 12 have not. This number is from January 5th of this year.

There were five major takeaways from the study conducted:

  • Mean hospital uncompensated care costs dropped 53.3% in 2017 compared to before the Medicaid expansion. Medicaid expansion was associated with a $6.4 million decrease in 2017. Prior to the expansion, that number was at $12 million.
  • Compared to pre-expansion numbers, expansion had been associated with a 2.6% point drop.
  • According to the study, Medicaid expansion had been associated with an $8.6 million annual increase. This is in mean Medicaid revenue.
  • The study provided that the expansion had improved mean operating margins by 1.7%. This is in comparison to the points garnered in the pre-expansion period.
  • Statistically, hospitals in states that had expanded Medicaid are more likely to be nonprofit organizations. They are also more likely to be larger and have a teaching affiliation – as well as being in metropolitan areas. This is compared to hospitals that are in non-expansion states.

Due to the findings of the study, it’s now known that these Medicaid expansion states experience lower uncompensated care costs, increased Medicaid revenue and that the operating margins continue to be improved three to four years after states have expanded Medicaid. It’s found that the benefits of this decision are not a one-time occurrence.


What About The Other 12 States?

The other 12 states, the ones that have not opted for Medicaid expansion; will want to reconsider in wake of the COVID-19 pandemic and the impact the disease has had on hospital finances. Fredric Blavin, the principal research associate in the Health Policy Center at Urban Institute; expressed:

“As COVID-19 has brought hospitals to a time of great need, findings from this study provide important information on what hospitals in states that have yet to expand Medicaid could gain through expansion. In addition, our results show what is at risk and what hospital types may be disproportionately affected should any reversal of Medicaid expansions occur.”

What Is the Impact of Medicaid Expansion on State Spending?

Expanding Medicaid allows states to reduce their spending on traditional Medicaid. As a result, the net increase is smaller than the cost of expansion. Typically, with traditional Medicaid, states must share the cost of expansion. There is also a chance that expanding Medicaid could allow states to cut their spending outside of Medicaid. This is especially true with programs that provide health services to those with a low-income.

Recovering Financial Lost For Hospitals

As mentioned earlier, the COVID-19 pandemic has been a financial hurdle for everyone. Most especially hospitals. With hospitals more important than ever, recovering financial losses are vital to keeping healthcare facilities open. So they can continue helping those who need it most. ERISA Recovery can help with recovering financial losses to ensure hospitals continuing serving people.