Long-Term Impact of Medicaid Expansion on Not-for-Profit Hospital Community Benefit Spending in the Southern United...

To examine the long-term impact of Medicaid expansion on not-for-profit (NFP) hospital community benefit (CB) spending among hospitals located in Arkansas and Kentucky (9 y postexpansion), Louisiana (7 y postexpansion), and Alabama, Mississippi, Tennessee, and Texas (nonexpansion states).

To maintain tax-exemption status, NFP hospitals must provide CB, such as charity care and population health initiatives. In the short term, Medicaid expansion has led to decreased charity care and increased Medicaid shortfalls, but no change to other CB categories. Given these early findings and Medicaid expansion's impact on hospital finances, it is important to understand whether hospitals continued to adjust their CB spending.

We used data on hospital CB spending (2011-2022), for NFP hospitals located in the West South Central and East South Central Census divisions. States that expanded Medicaid formed the treatment group (69 hospitals) and nonexpansion formed the control group (90 hospitals). We used staggered difference-in-differences and event study designs to examine changes in total CB, clinical, and population health spending as a share of operating expenses.

We found that Medicaid expansion was associated with a decrease in total CB spending by ∼$782,000 per hospital ( P =0.01). Clinical and population health spending decreased by ∼$759,000 ( P =0.01) and $92,000 per hospital ( P =0.009), respectively.

Among southern hospitals, Medicaid expansion led to sustained long-term reductions in CB spending. Our findings suggest that states may need to implement CB laws to encourage hospitals to invest more in their communities.