The Financial Benefit to Hospitals from State Expansion of Medicaid

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Beginning in January 2014, the ACA extends public coverage under Medicaid to adults making below 138 percent of the federal poverty level (FPL). While, this expansion increases hospitals’ public insurance revenue by creating a larger Medicaid coverage pool, it may also mean that some people currently paying for private coverage will drop it and enroll in Medicaid, resulting in lower payments when they receive hospital care.

This brief looks at whether hospitals stand to gain more in revenue under the ACA's Medicaid expansion compared to a scenario with no expansion in Medicaid eligibility.

Key Findings

  • For each dollar lost from private insurers, expansion increases hospitals' Medicaid reenues by $2.59.

  • Medicaid expansion lets hospitals use the ACA's new presumptive eligibility option to obtain payment for a significant proportion of the uncompensated care that would remain, even after expansion.

This Quick Strike Series brief, published online in March 2013 by the Urban Institute with the support of RWJF, looks at whether hospitals stand to gain more in revenue under the ACA's Medicaid expansion compared to a scenario with no expansion in Medicaid eligibility.

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