Effects of Expanded California Health Coverage on Hospitals: Implications for ACA Medicaid Expansions

Abstract

Objective: To assess the effects on hospitals of early California actions to expand insurance coverage for low-income uninsured adults after passage of the Affordable Care Act.

Data sources/study setting: Data from the California Office of Statewide Health Planning and Development and the California Department of Health were merged with U.S. census data for 294 short-term general hospitals during the period 2009-2012.

Study design: A difference-in-difference analysis was conducted with hospitals in counties that did not implement insurance expansions used as a comparison group. Variables examined included payer mix, costs of unreimbursed care, and hospital operating margin. Sensitivity analyses were conducted as well as a triple difference analysis. Effects were estimated for hospitals overall and by ownership type.

Principal findings: California insurance expansions primarily benefited for-profit hospitals, with these facilities experiencing significant decreases in self-pay patients, increases in county-covered patients, and reductions in charity care. Most models yielded no significant change in payer mix and conflicting changes in unreimbursed care for nonprofit hospitals.

Conclusions: California hospitals that treated the most uninsured prior to insurance expansions did not as a group experience substantial benefit in terms of reduced uninsured burden or better financial performance after program expansions occurred.

Keywords: Medicaid expansions; hospital payer mix; hospital profitability.