Studies Show That Medicaid Expansion Helps Hospitals and Providers

This week, the Kaiser Family Foundation (KFF) released a new issue brief about the effects of Medicaid expansion on hospitals and other providers. KFF found that recent studies agree with previous data and generally show positive effects in reducing uncompensated care and uninsured status, as well as increasing revenues for providers.

To reduce the number of uninsured people in the United States, the Affordable Care Act (ACA) expanded Medicaid for adults with low incomes. The Supreme Court limited the expansion to states that chose to opt in. Today, 39 states and the District of Columbia have expanded Medicaid, 11 states have not expanded their Medicaid programs, and one state, South Dakota, will have an expansion going into effect in July of 2023.

For the issue brief, KFF surveyed the results of 24 studies on the economic effects of expansion during the last two years and compared those study findings to previous work that explored a similar topic. These pandemic-era studies are especially important given the huge stresses COVID-19 has put on the health care system and the massive increase in the number of people covered by Medicaid. This surge in Medicaid enrollment is likely to decline sharply as states resume normal processes in 2023.

Previous studies found a huge improvement in the number of uninsured patients and the amount of uncompensated care hospitals provide in Medicaid expansion states. Where the more recent studies touch on this issue, most found the same improvement, though the effect was not seen in studies that focused on critical access and safety-net providers.

Previous studies found that Medicaid expansion improved provider operating revenues, and some studies show that expansion may reduce annual hospital closures. The more recent studies have similar findings, though the effect is again variable and may not be helping critical access hospitals or free and charitable clinics.

Notably, most of the favorable effects are also concentrated in hospitals that do not have obstetrics units, and the latest news shows these units are at risk of closure nationally.

KFF also notes that these studies do not investigate the effects of Medicaid expansion on states but that previous studies found positive effects on state finances, including budgets, revenues, and economic growth.

Medicaid expansion has been a useful tool most states can use to help decrease their uninsured population and bolster local hospitals. We will continue to urge the 11 holdout states to expand Medicaid to ensure that people who cannot afford health care on their own can gain access to the care they need.

Read the issue brief.

Read more about the surge in Medicaid enrollment.