Early Medicaid Expansion In Connecticut Stemmed The Growth In Hospital Uncompensated Care

Abstract

As states continue to debate whether or not to expand Medicaid under the Affordable Care Act (ACA), a key consideration is the impact of expansion on the financial position of hospitals, including their burden of uncompensated care. Conclusive evidence from coverage expansions that occurred in 2014 is several years away. In the meantime, we analyzed the experience of hospitals in Connecticut, which expanded Medicaid coverage to a large number of childless adults in April 2010 under the ACA. Using hospital-level panel data from Medicare cost reports, we performed difference-in-differences analyses to compare the change in Medicaid volume and uncompensated care in the period 2007-13 in Connecticut to changes in other Northeastern states. We found that early Medicaid expansion in Connecticut was associated with an increase in Medicaid discharges of 7-9 percentage points, relative to a baseline rate of 11 percent, and an increase of 7-8 percentage points in Medicaid revenue as a share of total revenue, relative to a baseline share of 10 percent. Also, in contrast to the national and regional trends of increasing uncompensated care during this period, hospitals in Connecticut experienced no increase in uncompensated care. We conclude that uncompensated care in Connecticut was roughly one-third lower than what it would have been without early Medicaid expansion. The results suggest that ACA Medicaid expansions could reduce hospitals' uncompensated care burden.

Keywords: Health Reform; Hospitals; Medicaid.

EXHIBIT 2

Unadjusted Trends In Medicaid Discharges As A Share Of Total Discharges For Hospitals In Connecticut And Other Northeastern States, 2007–13 Source/Notes: SOURCE Authors’ analysis of 2007–13 Medicare cost report data. NOTES The analysis sample included 1,985 observations from 434 hospitals in Connecticut and the comparison “Northeastern states” (Maine, New Hampshire, New York, Pennsylvania, Rhode Island, and Vermont). In all years, Medicaid discharges are expressed as a fraction of total discharges in the period before Connecticut expanded Medicaid (2007–09). Error bars represent the 95% confidence interval.

EXHIBIT 3

Unadjusted Trends In Uncompensated Care As A Share Of Total Expenditures For Hospitals In Connecticut And Other Northeastern States, 2007–13 Source/Notes: SOURCE Authors’ analysis of 2007–13 Medicare cost report data. NOTES The analysis sample included 1,985 observations from 434 hospitals in Connecticut and the comparison “Northeastern states” (Maine, New Hampshire, New York, Pennsylvania, Rhode Island, and Vermont). In all years, uncompensated care is expressed as a fraction of total hospital expenditures in the period before Connecticut expanded Medicaid (2007–09). Error bars represent the 95% confidence interval.