Does the ACA Medicaid Expansion Affect Hospitals’ Financial Performance?

Pengju Zhang, Ling Zhu

Research output: Contribution to journalArticlepeer-review


This paper examines the effects of states’ Medicaid expansion under the Affordable Care Act (ACA) on hospitals’ financial performance in the United States. Extending previous studies that primarily focus on the immediate short-term impact of the ACA's Medicaid expansion, we investigate if the fiscal effects persist over a longer-term and if the fiscal effects vary across different hospitals. Using panel data on hospitals from 2011 to 2018, we find that hospitals’ financial performance, as gauged either by Medicaid net revenue and uncompensated care cost or by multiple profitability measures, improves in Medicaid expansion states, and the positive effects continue over time. In addition, there are significant heterogeneities in the fiscal effects across different hospitals. Hospitals’ profitability improves the most in the public sector, rural areas, and less wealthy counties.

Original languageEnglish (US)
Pages (from-to)779-814
Number of pages36
JournalPublic Finance Review
Issue number6
StatePublished - Nov 2021

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Public Administration


  • health care reform
  • heterogeneous policy effects
  • hospital finance
  • medicaid expansion
  • ownership
  • uncompensated care


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