Study Highlights Impact of ACA Medicaid Expansion on Uncompensated Care

More than six years after it was signed into law, the Affordable Care Act continues to prompt debate.

Research from scholars like NC State doctoral student Susan Camilleri helps inform the policymakers who argue on both sides of the law.

Camilleri’s most recent project, for instance, focuses on the ACA’s requirement to expand Medicaid, a provision designed to provide coverage for more low-income individuals and, in turn, reduce hospitals’ burden to provide free or reduced-cost care. Using cost-reporting data, Camilleri led a study examining whether those intended outcomes are indeed the reality. Her findings, which she presented in a poster at NC State’s 2016 Graduate Student Research Symposium, offer an early analysis of uncompensated care charges at hospitals in Medicaid expansion and non-expansion states.

Camilleri, who is pursuing a Ph.D. in Public Administration, also presented her work in November 2015 as a paper at the research conference for the Association for Public Policy Analysis and Management (APPAM). She’s currently finalizing a manuscript for publication.

We touched base with Camilleri about her work and its impact in the field.  

Q: What led you to pursue this study?

A: Having worked in a physician’s office for several years before starting grad school at NC State, I have a long-standing interest in health policy. The introduction of the ACA presented researchers with the opportunity to examine important questions being asked in the field. In particular, the 2012 Supreme Court decision rendering the Medicaid expansion optional provided a natural experiment for policy analysts to test its effects on a variety of outcomes.

This gave me the opportunity to examine the underlying assumption that by expanding Medicaid to cover more low-income, uninsured individuals, hospitals would not need to provide as much free or reduced cost care. The ACA used this assumption as the foundation for provisions that cut federal funding designed to cover the cost of providing this care, so it is important to know if it is correct. And there is mounting evidence that hospitals treating low-income patients in rural areas are struggling to keep their doors open. If the assumption is correct, an infusion of Medicaid revenue could help these hospitals remain open, which would be particularly needed when the funding cuts go into effect.

Q: With the ACA being signed into law only a few years ago, I can’t imagine there being a whole lot of data for scholars to work with thus far. How were you able to find data for this early analysis?

A: That’s true – there is usually a lag in the availability of publicly accessible data. For this project, I used Medicare cost reporting data. Each year, Medicare-certified hospitals are required to submit a cost report that includes detailed information regarding facility characteristics, cost and charge data, financial data and uncompensated care data. When I began the project in early 2015, data for the first year of the full Medicaid expansion, 2014, were not yet available. As a result, I decided to look at states that chose to expand Medicaid early. As more recent data become available, I plan to continue looking at this issue.

Q: What did you analyze?

A: I looked at the effect of expanding Medicaid early on hospital provision of uncompensated care. In order to meet their health care needs, the uninsured often rely on doctors and hospitals to provide free or reduced cost care, known as uncompensated care. Uncompensated care includes both charity care, provided when a patient is unable to pay, and bad debt, which occurs when a patient is able, but unwilling, to pay.

To test the causal effect of expanding Medicaid on hospital provision of uncompensated care, I used a quasi-experimental research design with a treatment group made up of early expanding states and a control group comprised of states not moving forward with the expansion. By comparing the pre- and post-treatment difference in the outcome for the treatment and the control groups, we can get a good idea of what effect, if any, the Medicaid expansion had on hospital uncompensated care.

Q: What did you find?

A: The results indicated that the effect of the early Medicaid expansion was not uniform across all hospitals in the sample. In particular, I found that hospitals in expanding states that treat a disproportionate share of low-income patients did see a significant reduction in their provision of uncompensated care relative to similar hospitals in non-expanding states. However, when all hospitals are included in the analysis, the effect goes away.

This finding implies, unsurprisingly, that the early Medicaid expansion had the greatest effect on reducing uncompensated care in communities that have a high proportion of low-income, and presumably uninsured, individuals.

Q: What is the significance of these findings?

A: These findings have important implications for policy and practice. The results lend evidence in support of the assumption that expanding insurance to cover more low-income individuals reduces provision of hospital uncompensated care.

This is good news for states that expanded Medicaid, as these hospitals, particularly in rural areas, will be able to offset some of the funding cuts set to take place in the next several years. However, it suggests that hospitals in non-expanding states are likely to experience a shortfall in covering the costs of providing uncompensated care, as they will not see the same increase in Medicaid revenue and decrease in demand for uncompensated care as expansion states.

Policymakers in states that have not yet expanded should take this into consideration moving forward, as the need to cover these funding gaps may have a variety of consequences. Some hospitals may have to start turning away patients who are unable to pay for care or, as mentioned earlier, rural hospitals unable to weather the financial losses may continue closing at higher rates.

Q: How have professors or your experiences at NC State helped prepare you for research like this?

A: The courses I have taken at NC State as a grad student and the faculty in the Department of Public Administration have been invaluable to me as I navigate my way through this process. I don’t think I would have gotten this far without the support of my committee.

Going into this project, I did not have a lot of experience working with longitudinal data or using an experimental research design. I’m thankful for my committee’s guidance as I went through a lot of trial and error along the way. Dr. Jeffrey Diebold, my committee co-chair, has been particularly instrumental in helping me, not only with this study, but with my dissertation as a whole. The faculty taking the time to make sure I succeed in the program and as a researcher means a lot.

Q: What’s next for you after grad school?

A: My goal is to go on the academic job market in the fall and graduate in spring 2017 — I’d love to land at a major research university where I can continue my work in policy analysis. However, we know what happens to the best laid plans, so right now I’m focusing on defending my prospectus and being open to whatever opportunities come my way.