The ACA Medicaid Expansion, Disproportionate Share Hospitals, and Uncompensated Care

ObjectiveTo estimate the effect of the first full year of the ACA Medicaid expansion on hospital provision of uncompensated care, with special attention paid to hospitals that treat a disproportionate share of low-income patients. Data SourcesData from a balanced panel of short-term, general, nonfederal, Medicare-certified hospitals were obtained from Medicare cost reports from 2011 to 2014. Study Design/Study SettingA series of difference-in-differences analyses were performed using hospitals in nonexpansion states as the control group. The dependent variable is hospital provision of uncompensated care. Data Collection/Extraction MethodsThe data were downloaded from the National Bureau of Economic Research website. Principal FindingsThe Medicaid expansion significantly reduced hospital provision of uncompensated care in 2014. In particular, within expansion states, DSH hospitals saw reductions beyond those experienced by non-DSH hospitals. ConclusionsEvidence from this study indicates that the Medicaid expansion served to widen an already broad gap in provision of uncompensated care between hospitals in expansion and nonexpansion states. In addition, within expansion states, variation in uncompensated care between hospitals that treat a disproportionate share of low-income patients and those that do not was reduced, with the former experiencing significantly larger reductions. Lawmakers considering expanding Medicaid and those deciding appropriate levels of DSH payments should consider these findings.