Does the ACA Medicaid Expansion Affect Hospitals’ Financial Performance?

TY - JOUR

T1 - Does the ACA Medicaid Expansion Affect Hospitals’ Financial Performance?

AU - Zhang, Pengju

AU - Zhu, Ling

N1 - Funding Information: The authors received no financial support for the research, authorship and/or publication of this article. Publisher Copyright: © The Author(s) 2022.

PY - 2021/11

Y1 - 2021/11

N2 - 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.

AB - 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.

KW - health care reform

KW - heterogeneous policy effects

KW - hospital finance

KW - medicaid expansion

KW - ownership

KW - uncompensated care

UR - http://www.scopus.com/inward/record.url?scp=85124335153&partnerID=8YFLogxK

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U2 - https://doi.org/10.1177/10911421211064676

DO - https://doi.org/10.1177/10911421211064676

M3 - Article

SN - 1091-1421

VL - 49

SP - 779

EP - 814

JO - Public Finance Review

JF - Public Finance Review

IS - 6

ER -