U-M Study: Medicaid Expansion Sees Decrease in Hospital Care for Uninsured Patients

Six months after Medicaid coverage expanded under the Affordable Care Act in the United States, states saw a 50 percent drop in the amount of care provided to uninsured patients and a rise in care for people with coverage, according to a new University of Michigan study.

"In expansion states, we see exactly what we would expect to happen after Medicaid became available to more people," says Sayeh Nikpay, lead author of the study and a recent postdoctoral fellow at the U-M Medical School. "Even in these early months, the shift from uninsured to Medicaid contrasts sharply with the steady demand for uninsured care in non-expansion states. This has implications for the financial status of hospitals."

Nikpay says the fast, sharp effect of the expanded coverage suggests one of the key parts of the Affordable Care Act works as intended, giving hospitals a chance to recoup more of the cost of care they provide instead of having to absorb it when a low-income patient can't pay.

Nikpay says the study looked at hospital discharges in a sample of states that expanded Medicaid. Hospital stays by uninsured patients decreased by 50 percent, and stays by people with Medicaid went up by 20 percent from the end of 2013 to the middle of 2014.

In the sample of states that didn't expand Medicaid coverage after a U.S. Supreme Court decision made the expansion optional, hospitals continued to experience the same or higher demand for care from people without insurance. 

The expansion states were Arizona, California, Colorado, Hawaii, Iowa, Kentucky, Minnesota, New Jersey, and New York, while the non-expansion states were Florida, Georgia, Indiana, Missouri, Virginia, and Wisconsin.

The researchers, including Thomas Buchmueller, the chair of business economics and public policy at the U-M Ross School of Business, and Helen Levy, a research associate professor at U-M's Institute for Social Research, did not include data from Michigan — a state that expanded Medicaid but didn't begin enrolling and covering residents until April 2014. The researchers are now beginning a study on Michigan’s experience with the Medicaid expansion.

The study appears in the January issue of Health Affairs.