How Has the ACA Changed Finances for Different Types of Hospitals?

New analysis finds that with the Affordable Care Act (ACA) intact, expanding Medicaid could improve hospital finances in nonexpansion states.

The Issue

The American Health Care Act, which was considered by Congress, would have repealed the state option to expand Medicaid under the ACA. However, with the ACA remaining intact, states that did not expand Medicaid now have the chance to reconsider.

Key Findings

Using data through fiscal year 2015:

• In states that expanded Medicaid through the ACA, hospitals had $5.0 million in increased Medicaid revenue and $3.2 million decreased uncompensated care costs, on average per hospital. 
  
• Hospitals in states that expanded Medicaid through the ACA improved average operating margins by 2.5 percentage points.
• Small hospitals, for-profit and non-federal-government-operated hospitals, and those in non-metropolitan areas saw the strongest gains in profit margins.

Conclusion

For states still considering Medicaid expansion, experts say that expansion likely would improve hospitals’ payer mix and overall financial outlook, particularly for hospitals in non-metro areas.

About the Urban Institute

The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. Visit the Urban Institute’s Health Policy Center for more information specific to its staff and its recent research.