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Health Aff (Millwood). 2018 Jan;37(1):111-120. doi: 10.1377/hlthaff.2017.0976.

Understanding The Relationship Between Medicaid Expansions And Hospital Closures.

Author information

1
Richard C. Lindrooth ( richard.lindrooth@ucdenver.edu ) is a professor in the Department of Health Systems, Management, and Policy, Anschutz Medical Campus, Colorado School of Public Health, University of Colorado, in Aurora.
2
Marcelo C. Perraillon is an assistant professor in the Department of Health Systems, Management, and Policy, Anschutz Medical Campus, Colorado School of Public Health, University of Colorado.
3
Rose Y. Hardy is a graduate student in the Department of Health Systems, Management, and Policy, Anschutz Medical Campus, Colorado School of Public Health, University of Colorado.
4
Gregory J. Tung is an assistant professor in the Department of Health Systems, Management, and Policy, Anschutz Medical Campus, Colorado School of Public Health, University of Colorado.

Abstract

Decisions by states about whether to expand Medicaid under the Affordable Care Act (ACA) have implications for hospitals' financial health. We hypothesized that Medicaid expansion of eligibility for childless adults prevents hospital closures because increased Medicaid coverage for previously uninsured people reduces uncompensated care expenditures and strengthens hospitals' financial position. We tested this hypothesis using data for the period 2008-16 on hospital closures and financial performance. We found that the ACA's Medicaid expansion was associated with improved hospital financial performance and substantially lower likelihoods of closure, especially in rural markets and counties with large numbers of uninsured adults before Medicaid expansion. Future congressional efforts to reform Medicaid policy should consider the strong relationship between Medicaid coverage levels and the financial viability of hospitals. Our results imply that reverting to pre-ACA eligibility levels would lead to particularly large increases in rural hospital closures. Such closures could lead to reduced access to care and a loss of highly skilled jobs, which could have detrimental impacts on local economies.

KEYWORDS:

Financing Health Care; Health Reform; Hospitals; Medicaid; Rural Health Care

PMID:
29309219
DOI:
10.1377/hlthaff.2017.0976

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