Does the ACA Medicaid Expansion Affect Hospitals’ Financial Performance?

Pengju Zhang and Ling Zhu

Public Finance Review, 2021, vol. 49, issue 6, 779-814

Abstract: 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.

Keywords: health care reform; medicaid expansion; hospital finance; ownership; uncompensated care; heterogeneous policy effects (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:49:y:2021:i:6:p:779-814

DOI: 10.1177/10911421211064676

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