- The financial promises of Medicaid expansion have fallen flat in many states, according to a new Moody's report.
- Although unpaid bills were down 13% in 2014, operating margins didn't increase compared to the 22 states who opted out of the expansion. For example, Illinois saw an increase of 500,000 Medicaid enrollees; Some state hospitals saw a drop in unpaid bills but still incurred big costs.
- Improved overall performance—including states that opted out of expansion—was due to a better economy last year and lower employment rates, the report states.
States that opted to expand Medicaid coverage were expecting fewer bills and more revenue, but the report found that hasn't led to increased operating margins or cash flow.
"Clearly, reducing bad debt is positive, but it is not this silver bullet," said Daniel Steingart, a Moody's analyst and study author. He added that report questions "a narrative out there that Medicaid expansion has lowered bad debt and that is driving [financial] improvements at hospitals."
Steingart did suggest that Medicaid expansion could help some hospitals in states that have opted out because programs in those states often have narrower eligibility guidelines, creating higher unpaid bills that can be addressed by increased enrollment.