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Study: Full Medicaid expansion would benefit hospitals

March 22, 2013

If all 50 states implement the Patient Protection and Affordable Care Act’s Medicaid expansion for adults with incomes up to 138% of the federal poverty level, hospital revenues would increase by $2.59 for every dollar lost from private insurance revenue, according to a new study by the Urban Institute. The study, funded by the Robert Wood Johnson Foundation, estimates that hospitals’ Medicaid revenue would increase by $293.9 billion if every state opts in to the Medicaid expansion. At the same time, hospitals would lose $113.6 billion in revenue as some patients move from private insurance plans to public coverage. The report notes that the ACA will reduce reimbursements to hospitals to fund expansion of coverage through Medicaid and the health insurance exchanges. “The Supreme Court’s decision to make Medicaid expansion optional for states jeopardizes the ACA’s implicit bargain with hospitals – namely, significant payment cuts in exchange for significant increases in the number of patients with insurance,” the report summary states. “…Hospitals located in states opting out of the expansion will not receive the full measure of offsetting, promised revenues and thus will be at a relative disadvantage when the ACA is fully implemented in 2014.”