ACA Medicaid Expansion Drove Large Drop in Uncompensated Care

Health coverage gains continued to drive down uncompensated care costs through 2016, according to the latest data from the Medicaid and CHIP Payment and Access Commission. Such costs have fallen significantly since the Affordable Care Act’s (ACA) major coverage expansions took effect, as we’ve reported. From 2013 to 2016, as the uninsured rate fell nationally from 14.5 to 8.6 percent (or by more than two-fifths), uncompensated care costs as a share of hospital operating expenses fell by 38 percent. This equates to nearly $22 billion in reduced uncompensated care costs in 2016 alone.

While uncompensated care costs fell in all states, states that expanded Medicaid to many more low-income adults under the ACA saw both larger coverage gains and larger drops in uncompensated care: a 55 percent fall in uncompensated care costs on average compared to an 18 percent fall in states that did not expand Medicaid (see table). More generally, declines were larger in states where uninsured rates fell more, with a roughly one-to-one relationship between percent declines in uninsured rates and in uncompensated care costs as a share of hospital operating expenses. (See figure.)

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