Effects of Expanded California Health Coverage on Hospitals: Implications for ACA Medicaid Expansions

To assess the effects on hospitals of early California actions to expand insurance coverage for low-income uninsured adults after passage of the Affordable Care Act.

Data from the California Office of Statewide Health Planning and Development and the California Department of Health were merged with U.S. census data for 294 short-term general hospitals during the period 2009-2012.

A difference-in-difference analysis was conducted with hospitals in counties that did not implement insurance expansions used as a comparison group. Variables examined included payer mix, costs of unreimbursed care, and hospital operating margin. Sensitivity analyses were conducted as well as a triple difference analysis. Effects were estimated for hospitals overall and by ownership type.

California insurance expansions primarily benefited for-profit hospitals, with these facilities experiencing significant decreases in self-pay patients, increases in county-covered patients, and reductions in charity care. Most models yielded no significant change in payer mix and conflicting changes in unreimbursed care for nonprofit hospitals.

California hospitals that treated the most uninsured prior to insurance expansions did not as a group experience substantial benefit in terms of reduced uninsured burden or better financial performance after program expansions occurred.