How Do Hospitals Respond to the Affordable Care Act Medicaid Expansions?

Above: The ACA Medicaid Expansion reduced hospital uncompensated care costs, but it did not increase hospital bed capacity.

Download paper.

Abstract

Hospitals frequently provide health care to uninsured patients without receiving compensation. ACA Medicaid expansions reduced hospitals’ uncompensated care burdens by providing the uninsured with a means of payment in the form of insurance. Anecdotal evidence from hospital administrators suggests hospitals in expansion states respond to their improved financial positions by increasing capacity, purchasing equipment, and hiring more workers. I investigate such claims using hospital financial report data from CMS. Using a differences-in-differences regression framework, I find no evidence that hospitals in expansion states increased bed capacity, capital expenditures, or FTEs relative to hospitals in non-expansion states.