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

To 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 from a balanced panel of short-term, general, nonfederal, Medicare-certified hospitals were obtained from Medicare cost reports from 2011 to 2014.

A 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.

The data were downloaded from the National Bureau of Economic Research website.

The 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.

Evidence 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.