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Benefits of Medicaid Expansion for Hospitalists


By January 2016, 31 states and the District of Columbia had embraced the Medicaid expansion brought to bear by the Affordable Care Act. Three states had not expanded but were “in active discussion,” while 16 states continued to opt out.1

The impacts of those decisions—on hospitals, on patients, and on physicians—are now beginning to be emerge. Several early studies, published toward the end of 2015 and in early 2016, show how the choice to expand or not expand impacted payor mix, patient access to quality healthcare, and physician reimbursement.

A study published in Health Affairs found states that expanded Medicaid in 2014, including Minnesota, Kentucky, and Arizona, saw a dramatic decrease in uninsured hospital stays and a significant increase in Medicaid stays. In six states that did not expand that year, including Florida, Georgia, and Missouri, there was no significant change in payor mix.2

“What a lot of these early studies are saying is that when you expand Medicaid, people get on Medicaid, and that’s exactly what you hope will happen when you do a major public coverage expansion,” says study lead author Sayeh Nikpay, PhD, MPH, assistant professor of health policy at Vanderbilt University School of Medicine in Nashville, Tenn. “Physicians are grappling with payment issues, and it should be quite a relief that people are coming in the door with some kind of insurance rather than uninsured.”

Instant Impact

Dr. Nikpay and the research team at the University of Michigan Institute for Healthcare Policy & Innovation (where she was previously a postdoctoral researcher) utilized a free online tool, HCUP Fast Stats (Healthcare Cost and Utilization Project), from the Agency for Healthcare Research and Quality. They examined adult discharges by quarter in 2013 and 2014 in each state in the study, controlling for demographic and economic characteristics.

Expansion states, the team learned, experienced a seven percentage point rise in Medicaid shares and a six percentage point drop in uninsured shares, reflecting a respective 20% increase in Medicaid discharges and 50% decrease in uninsured discharges. The effect was particularly profound in Kentucky, which saw a 13.5% drop in uninsured shares.

This underscores the “significant benefits of Medicaid expansion for low-income adults and for the hospitals that serve them,” the study authors concluded.

With positive data from this study and others—and the federal government willing to work with states on alternative expansion models, like in Arkansas, which is using Medicaid dollars to subsidize private insurance for recipients—Colleen M. Grogan, professor in the School of Social Service Administration at The University of Chicago, says the remaining states may feel more pressure to expand.

They are “getting pressure from hospitals and the business sector,” Grogan says. “It has an enormous impact on the economy. I don’t think any state is exempt from economic impact when they give up an infusion of federal funds.”

The federal government currently pays 100% of state Medicaid costs for the newly eligible upon expansion, eventually dropping to 90% by 2020.

A January 2016 Health Affairs study from researchers at Harvard University and Brigham and Women’s Hospital in Boston showed that traditional expansion in Kentucky and the “private option” expansion adopted in Arkansas both led to a decrease in the number of uninsured patients, an increase in access to healthcare, and fewer patients skipping medications or experiencing trouble paying medical bills between 2013 and expansion in 2014. This contrasted with the results in Texas, which has not expanded.3

Hospitalist Concerns

Dr. Cawley

Dr. Cawley

Patrick Cawley, MD, MBA, MHM, is CEO of the Medical University of South Carolina, previously practiced as a hospitalist, and is a past president of the Society of Hospital Medicine. For now, South Carolina is, like Texas, a non-expansion state. Dr. Cawley is concerned for the future of his hospital, an 800-bed academic, tertiary, safety-net hospital in Charleston, because payments to hospitals like his ultimately will drop.

Before a Supreme Court decision that ruled states were not compelled to expand Medicaid, the Affordable Care Act provided for a reduction in payments to safety-net hospitals. This was motivated by the notion that all hospitals would see a significant decrease in uncompensated care. The reduction has been delayed but is still scheduled to start in 2017.

“We couldn’t survive if disproportionate share goes away and something didn’t replace it, like Medicaid expansion,” Dr. Cawley says. But, he adds, over time he expects all or nearly all states will expand.

“When Medicaid first rolled out, it took 10 to 12 years before all states took it. I think expansion is the same way,” he says. “It’s one of those things that probably does work out, but what’s the transition going to be like, and how long is that transition going to last?” TH

Kelly April Tyrrell is a freelance writer in Madison, Wis.


  1. Status of state action on the Medicaid expansion decision. Kaiser Family Foundation website. Updated January 12, 2016. Accessed January 14, 2016.
  2. Nikpay S, Buchmueller T, Levy HG. Affordable Care Act Medicaid expansion reduced uninsured hospital stays in 2014. Health Aff. 2016;35(1):106-110. doi:10.1377/hlthaff.2015.1144.
  3. Sommers BD, Blendon RJ, Orav EJ. Both the ‘private option’ and traditional Medicaid expansions improved access to care for low-income adults. Health Aff. 2016;35(1):96-105. doi:10.1377/hlthaff.2015.0917.
  4. Jones CD, Scott SJ, Anoff DL, Pierce RG, Glasheen JJ. Changes in payer mix and physician reimbursement after the Affordable Care Act and Medicaid expansion. Inquiry. 2015;52. doi:10.1177/0046958015602464.

Good News for Hospitalists

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An additional 2015 study published by researchers at the University of Colorado Hospital found that Medicaid reimbursement to hospitalists per patient encounter rose 4.2% at the hospital in 2014 upon the state’s Medicaid expansion in January of that year. Medicaid encounters also increased, while uninsured encounters decreased.4

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