The Impact of Medicaid Expansions on Nonprofit Hospitals

Abstract

Abstract The 2010 Affordable Care Act expanded Medicaid eligibility to states’ residents with incomes below the federal poverty line, creating both opportunities and challenges to hospitals in states that adopted the new Medicaid eligibility. This article explores the effect of Medicaid expansions on nonprofit hospitals. Using data from Internal Revenue Service and a difference-in-differences design, this article examines the impact of the expansions on the number of, contributions to, and profitability of nonprofit hospitals. The results suggest that Medicaid expansions did not affect the number and profitability of nonprofit hospitals; however, the expansions were associated with a reduction in contributions to certain types of hospitals by around 23%. Therefore, the effects of policy changes vary by the type of nonprofit hospitals, which then need to find better strategies to cope with these changes.