State Regulation and Hospital Community Benefit Spending in Medicaid Expansion States

Previous studies show that nonprofit hospital spending on charity care declined in Medicaid expansion states. We test whether state community benefit regulations mitigated the decline in charity care spending.

We use a fixed effects model to evaluate the association between state regulations and nonprofit hospital community benefit spending and its subcategories as a share of total expenses in Medicaid expansion states. We obtained community benefit spending data from the Internal Revenue Service Form 990 Schedule H filings of 1,738 hospitals in 44 states and the District of Columbia from 2010 to 2017. We determine the stringency of state regulations by comparing the provisions of state and federal requirements based on regulation information compiled by the Hilltop Institute.

State minimum community benefit requirements are associated with increased community benefit and charity care spending by nonprofit hospitals in Medicaid expansion states.

States that imposed minimum community benefit requirements on nonprofit hospitals did not experience a decline in charity care spending after Medicaid expansion. The results suggest state minimum community benefit rules may expand the provision of community benefit and charitable care spending.