Dive Brief:

• Hospital stays by uninsured patients declined by 50% in the first two quarters of 2014 in states that expanded Medicaid availability, according to new research published in Health Affairs.

• The findings suggest the ACA resulted in changes in payer mix for hospitals in states that expanded Medicaid, giving hospitals a chance to recoup more of the cost of care they provide when an individual can’t pay for the care they receive.

• “It’s a really big difference in expansion versus non-expansion states,” Helen G. Levy, research associate professor at the University of Michigan's Institute for Social Research and co-author of the study, told Healthcare Dive. Compared to other provisions of the measure, the ACA provided an immediate and large effect to such hospital stays in states with expanded Medicaid programs, she said.

Dive Insight:

There are obvious financial and political impacts raised by the study. The most obvious: Hospitals in states that have expanded Medicaid presumably don’t have to deal with as much outstanding debt from patients who couldn’t pay their bills. And from a political standpoint, the study comes as the debate continues in many states, particularly in the South and Midwest, over Medicaid expansion.

“In expansion states, we see exactly what we would expect to happen after Medicaid became available to more people,” Sayeh Nikpay, lead author of the new study, said in a prepared statement. “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.”

The results come at a time when some states are considering expanding their programs and newly elected Kentucky Governor Matt Bevin (R) is mulling over a scaled-back expansion operation. Levy told Healthcare Dive hospital associations have been in favor of Medicaid expansion because they know, while Medicaid reimbursement is less than reimbursement from a private payer, more patients coming into hospitals with Medicaid coverage helps them recoup costs.

Nikpay and her colleagues, University of Michigan health economists Thomas Buchmueller and Levy, performed the study using hospital discharge payment source data from the Agency for Healthcare Research and Quality’s HCUP Fast Stats program. The researchers examined data from expansion states, including Arizona, California, Colorado, Hawaii, Iowa, Kentucky, Minnesota, New Jersey, and New York.

The findings also help reinforce what the three authors found from an earlier study that focused on Connecticut, which expanded Medicaid in 2010. They reported those findings earlier this year in Health Affairs. Levy noted their research data for this study was during “the depth of the recession” but noted uncompensated care increased in all states in the New England regions except Connecticut. “The uncompensated care rate stayed flat in Connecticut.”

It also should be noted Medicaid expansion has come with an increase in improper Medicaid payments ($14.4 billion in FY 2013 to $29.12 billion in FY 2015), and HHS says not many states have agreed to accept federal funding to undertake data-mining efforts to search claims.