After Arizona Expanded Medicaid, Hospitals Started Saving Money

Arizona Gov. Jan Brewer (R), who supports expanding Medicaid in her state. CREDIT: AP PHOTO/ROSS D. FRANKLIN
Arizona Gov. Jan Brewer (R), who supports expanding Medicaid in her state. CREDIT: AP PHOTO/ROSS D. FRANKLIN

Arizona Gov. Jan Brewer (R) fought hard to convince the GOP lawmakers in her state to accept Obamacare’s optional Medicaid expansion. Now, she’s seeing some of the fruits of her labor. According to a new report from the Arizona Hospital and Healthcare Association, hospitals in the state are saving money by providing less uncompensated care.

Uncompensated care is driven by low-income and uninsured people who can’t pay their hospital bills. After Arizona removed childless adults from its Medicaid program back in 2011, uncompensated care skyrocketed throughout the state. But now that Arizona has expanded Medicaid under the health reform law, a move that allowed childless adults to enroll in the public health program again, that trend is being reversed.

In the first four months of this year, according to the new report, the uncompensated care at Arizona hospitals dropped by 31 percent compared to the same period in 2013. That helped the average operating margin of Arizona hospitals to rise from 4 percent to 5.2 percent over the last year.

“We were hoping people would take advantage of the Medicaid and federal opportunity, that they would sign up,” Judy Rich, the chair of the Board of Directors for the Arizona Hospital and Healthcare Association, told the Arizona Daily Star, adding that she’s “guardedly optimistic” that those enrollment efforts were successful.

According to the Kaiser Family Foundation (KFF), Arizona’s decision to expand Medicaid will eventually cut the state’s uninsurance rate by nearly a third.

The editorial board of the Arizona Republic is praising Brewer for her role in helping coverage go up and costs go down. “This happened because of Brewer’s tenacity,” they write. “Our Republican governor fought a pitched battle with members of her own party to win approval to expand Medicaid under the Affordable Care Act… Medicaid expansion is paying off in Arizona.”

A similar dynamic is playing out in other states across the country as Obamacare’s coverage expansion has begun to take effect. Safety net hospitals that serve a disproportionate number of poor and uninsured people report that more of their patients now have insurance. Emergency rooms have also started to notice a drop in the number of uninsured patients seeking care. And public hospitals say that an influx of newly insured Medicaid patients is helping their bottom lines.

However, a starkly different story is unfolding in the areas of the country that have rejected Obamacare’s optional Medicaid expansion. Millions of low-income people are being locked out of health reform because their lawmakers continue to resist accepting federal funds to expand the Medicaid rolls. Rural hospitals in states like Tennessee, Georgia, Virginia, and North Carolina have been forced to close because they can’t afford to remain operating without the Medicaid reimbursements from the low-income people who would have been eligible for the expansion.