Failing to close the gap is a missed opportunity for consumers, hospitals and states. The uninsured rate in the 30 states (including D.C.) that have closed the gap fell from 18 percent to just below 11 percent. States have reaped billions in savings from new revenues and reduced costs of caring for the uninsured. And enrollment in new coverage options has saved hospitals across the country $7.4 billion in uncompensated care costs in 2014 – with hospitals in expansion states reaping double the savings as those in non-expansion states.
With all this evidence of the benefits of covering more people, we’d have to disagree with recent reports that suggest that closing the coverage gap is not helping hospitals’ bottom lines. First of all, it’s important to remember that Medicaid expansion was never intended to be a silver bullet for hospital finances. Nevertheless, evidence so far demonstrates that closing the coverage gap is a precondition for hospitals to thrive financially. This recent study illustrates the wide array of benefits to hospitals of closing the coverage gap:
- Hospitals in states that have closed the coverage gap saw larger declines in uninsured patients and greater savings in uncompensated care. In expansion states, hospitals saw between a 32 to 72 percent decline in uninsured patients, compared to a 0 percent to 14 percent decline for hospitals in non-expansion states. One hospital system even reported a 40 percent drop in uncompensated care in expansion states compared to a 6 percent increase in non-expansion states.
- Hospitals in states that closed the coverage gap find it less costly to provide care to poor patients. A study by Modern Healthcare has found that hospitals in expansion states saw a higher average year-over-year revenue increase compared with non-expansion states. And according to one large hospital system (located in 16 states and D.C.), expansion led to an overall decrease in cost of care to the poor as a result of lower uncompensated care and increases in Medicaid revenue from covering more low-income adults.
- State budgets are also benefitting from uncompensated care savings. Early assessments have captured how reductions in uncompensated costs translate into freed up state-budgets that could be used for other priorities. For example, because of reductions in uncompensated care, New Jersey is able to free up part of its newfound revenue to boost what Medicaid pays its doctors.
Likewise, the converse is true – hospitals are more likely to be struggling in states that have not closed the gap. By not covering people who would be eligible for Medicaid under the ACA, hospitals in those states will be vulnerable to federal-level changes to hospital funding. Rural hospitals are especially at risk. Since 2013, 24 rural hospitals have shut down across the nation, and most of those have been in states that have not extended coverage. By closing the gap, these states would boost the number of insured people, reduce uncompensated care costs and help struggling hospitals avoid closing their doors. Closing the gap is an opportunity that should not be missed by state policymakers.