ACA's Medicaid Expansion Reduced Uninsured Hospital Stays

In the first 2 quarters of 2014, hospital stays decreased dramatically while Medicaid stays increased sharply in states that expanded eligibility for Medicaid under the Affordable Care Act (ACA), according to a new study from Sayeh Nikpay, of the Vanderbilt University School of Medicine, and colleagues. States that did not expand Medicaid experienced very little change in the mix of payers for inpatient care.

The study was published in Health Affairs in January 2016. The study’s results were based on 15 states for which data were available through at least the second quarter of 2014.

The study authors said their findings underscored the significant benefits of Medicaid expansion not only for low-income adults, but also for the hospitals that serve this population. The impact of Medicaid expansion on hospitals will become even more important as 2017 approaches—when hospitals in all states will begin facing increasingly large annual cuts in disproportionate-share hospital payments that subsidize the cost of uncompensated care.

The data were drawn from state hospital discharge databases participating in the Healthcare Cost and Utilization Project that contain information on all discharges in the state and cover more than 95% of inpatient hospitalizations in each state. Data were aggregated by patient age and primary expected source of payment.

The analytic sample consisted of quarterly observations from the 15 states, from the first quarter of 2009 through the second quarter of 2014. Multivariate linear regression was used to compare changes in payer mix over time between states that did and those that did not expand Medicaid in a difference-in-differences analysis, controlling for state-level demographic and economic characteristics.

“Our analysis also makes it possible to disentangle the relative importance of Medicaid expansion versus the private Marketplace expansion in driving changes in payer mix,” the authors concluded. “The analysis provides the best evidence to date on how ACA coverage expansions affected the mix of payers for hospitalized patients, and what states that so far have chosen not to expand Medicaid might expect to experience should they decide to embrace expansion in the future.”