Study: Hospitals in Medicaid expansion states saw average revenue increase of $5M through 2015

With the ACA still intact — for now — the 19 states that have not expanded Medicaid under the law have the option to do so, a decision with important implications for hospitals, according to a report from the Robert Wood Johnson Foundation and the Urban Institute.

Expanding Medicaid could decrease hospitals' uncompensated care attributed to providing care to uninsured patients while increasing revenue from new Medicaid enrollees. The RWJF and Urban Institute study estimates the effects of Medicaid expansion on hospital finances through 2015 and how they compare between hospitals in states that expanded the program and those that did not.

Here are five main findings from the report.

1. As of 2015, Medicaid expansion was associated with a $3.2 million decline in average uncompensated care costsand a 1.7 percentage point reduction in average uncompensated care costs as a percentage of total expenses per hospital.

2. The $3.2 million decline in uncompensated care costs represents a 34 percent decrease from hospital's overall uncompensated care from 2011 to 2013.

3. Medicaid expansion was also associated with a $5 million annual increase in average Medicaid revenue per hospital. This comes out to a 2.9 percentage point increase in Medicaid revenue as a percentage of total revenue.  

4. The $5 million increase represents an 18.1 percent increase in Medicaid revenue when compared with the baseline average of $27.9 million among hospitals in expansion states.

5. Hospitals in expansion states also improved operating margins by 2.5 percentage points and excess margins by 1.7 percentage points, increases that represent 67.3 percent and 41.4 percent increases in operating excess margins, respectively, compared to baseline means in expansion states.

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