The Effect of ACA Medicaid Expansion on Hospital Revenue

28 Pages Posted: 11 Jul 2019 Last revised: 6 Aug 2020

See all articles by Ali Moghtaderi

Ali Moghtaderi

The George Washington University

Jesse Pines

George Washington University

Mark Zocchi

George Washington University

Bernard S. Black

Northwestern University - Pritzker School of Law; Northwestern University - Kellogg School of Management; European Corporate Governance Institute (ECGI)

Date Written: July 10, 2019

Abstract

Prior research has found that in states which expanded Medicaid under the Affordable Care Act, hospital Medicaid revenue rose sharply, and uncompensated care costs fell sharply, relative to hospitals in non-expansion states. This suggests that Medicaid expansion may have been a boon for hospital revenue. We conduct a difference-in-differences analysis covering the first four expansion years (2014-2017) and confirm prior results for Medicaid revenue and uncompensated care cost, over this longer period. However, we find that hospitals in expansion states showed no significant relative gains in either total patient revenue or operating margins. Instead, the relative rise in Medicaid revenue was offset by relative declines in commercial insurance revenue. In subsample analyses, we find higher revenue and margins for rural hospitals in expansion states, little change for small urban hospitals, and a revenue decline for large urban hospitals.

Note: The Online Appendix for this paper is available at http://ssrn.com/abstract=3416187.

Keywords: ACA Medicaid Expansion, Hospital Revenue, Hospital Unpaid Care Cost

Suggested Citation

Moghtaderi, Ali and Pines, Jesse and Zocchi, Mark and Black, Bernard S., The Effect of ACA Medicaid Expansion on Hospital Revenue (July 10, 2019). Available at SSRN: https://ssrn.com/abstract=3417768 or http://dx.doi.org/10.2139/ssrn.3417768

Ali Moghtaderi

The George Washington University ( email )

950 New Hampshire Ave NW
Suite 609
Washington, DC 20052
United States

Jesse Pines

George Washington University ( email )

2121 I Street NW
Washington, DC 20052
United States

Mark Zocchi

George Washington University ( email )

2121 I Street NW
Washington, DC 20052
United States

Bernard S. Black (Contact Author)

Northwestern University - Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States
312-503-2784 (Phone)

Northwestern University - Kellogg School of Management

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-5049 (Phone)

European Corporate Governance Institute (ECGI)

Brussels
Belgium

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