The Effect of Early Medicaid Expansion in California on Safety Net Hospital Utilization
*Names in bold indicate Presenter
Study Design: A difference-in-difference analysis of 2010-2013 changes in hospital utilization between California and several neighboring states that had no significant changes in Medicaid or public coverage programs during the same time period. Comparison states include Arizona, Nevada, and Washington. The analysis controls for other patient, hospital, and local area characteristics. The Healthcare Cost and Utilization Project (HCUP) is the primary source of data for this analysis, supplemented by data from the American Hospital Association annual survey, and the Area Health Resource File.
Population Studied: Safety net hospitals, including public hospitals, academic medical centers, Critical Access Hospitals, and other private hospitals that serve a disproportionately high number of uninsured and Medicaid patients.
Principal Findings: Given the expansions in public coverage in California between 2010-2013 due to the implementation of the Low Income Health Program (LIHP), we hypothesize that safety net hospitals in California observed an increase in utilization from Medicaid and other patients with public coverage, and a decrease in uninsured patients. By comparison, there will be little or no change in safety net hospital utilization by Medicaid and uninsured patients in Arizona, Nevada, and Washington. Because the size of the LIHP expansion varied across California counties, we also expect to see greater changes in utilization in counties that had greater LIHP expansions compared to counties that had smaller or no LIHP expansions. The analysis will also examine evidence of “cream-skimming” by non-safety net hospitals, i.e. whether the acuity-level of Medicaid and uninsured patients decreases at non-safety net hospitals, while the acuity level of patients increase at safety net hospitals. We will also examine whether care for the remaining uninsured patients in a community is becoming more concentrated at safety net hospitals compared to non-safety net hospitals.
Conclusions: This study is among the first to systematically examine the effects of ACA-related insurance coverage expansions on utilization of safety net hospitals. While previously uninsured patients who gain coverage will conceivably have greater choice in where to receive hospital care, many will continue to use safety net hospitals because of their more convenient location, a desire to maintain continuity of care with providers they trust, and greater cultural competence of many safety net providers in serving uninsured racial/ethnic minorities.
Implications for Health Policy: Based on the assumption of increased revenue from insured patients and reduced hospital uncompensated care costs from uninsured patients, the ACA reduces Medicare and Medicaid Disproportionate Share Hospital (DSH) payments, which most safety net hospitals depend on to help cover the costs of uncompensated care. Thus, the study provides evidence to policymakers as to whether safety net hospitals are at risk of being negatively impacted by the impending DSH cuts due to changes in volume, payer mix, and the acuity level of patients.