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Medicaid Expansion Not Significantly Improving Hospital Financial Health

While the Affordable Care Act’s Medicaid expansion has helped millions of Americans gain health insurance, it has not translated (so far) into improved financial health for the hospitals providing those Medicaid services.

This is the conclusion drawn recently by Moody’s Investor Services, the credit-rating company.

According to Moody’s, hospital financial performance has improved across the board since implementation of the Affordable Care Act but has not improved more in states that expanded their Medicaid programs than it has in states that chose not to expand Medicaid eligibility. As a result, hospital operating margins in states that have expanded their Medicaid programs have not improved more than those in states that did not expand.

financial paperworkWhat hospitals in expansion states have experienced in many cases is reduced uncompensated care as more of the patients who come through their doors have Medicaid coverage. The financial benefits this brings, though, are often offset, in part or in whole, because Medicaid underpays providers so much in many states.

The National Association of Urban Hospitals has long been concerned about this possibility, and especially about the effects of growing Medicaid shortfalls on the financial performance of non-profit urban safety-net hospitals. These and other concerns were raised in the December 2014 NAUH report “The Disproportionate Impact of Medicare Cuts and Health Care Reform on Urban Safety-Net Hospitals,” which can be found here.

Learn more about how Medicaid expansion is and is not affecting hospital financial performance in this Moody’s news release and this Wall Street Journal article.

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