New analysis finds that with the Affordable Care Act (ACA) intact, expanding Medicaid could improve hospital finances in nonexpansion states.
The American Health Care Act, which was considered by Congress, would have repealed the state option to expand Medicaid under the ACA. However, with the ACA remaining intact, states that did not expand Medicaid now have the chance to reconsider.
Using data through fiscal year 2015:
In states that expanded Medicaid through the ACA, hospitals had $5.0 million in increased Medicaid revenue and $3.2 million decreased uncompensated care costs, on average per hospital.
Hospitals in states that expanded Medicaid through the ACA improved average operating margins by 2.5 percentage points.
Small hospitals, for-profit and non-federal-government-operated hospitals, and those in non-metropolitan areas saw the strongest gains in profit margins.
For states still considering Medicaid expansion, experts say that expansion likely would improve hospitals’ payer mix and overall financial outlook, particularly for hospitals in non-metro areas.
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