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Study: Michigan hospitals are saving money thanks to the state's Medicaid expansion

Aug 12, 2017

Michigan’s Medicaid expansion is good for hospitals' bottom line and for the people using it, according to a study released earlier this week.

The Center for Healthcare Research and Transformation (CHRT) found that between 2013 and 2015, hospitals decreased uncompensated care costs by 56%. Uncompensated care is the amount of care a hospital provides but never gets fully reimbursed for.

In 2013, Michigan hospitals were spending $903 million in non-refunded care costs.

The state launched its Medicaid expansion program Healthy Michigan in April 2014. By 2015, hospitals were spending only $394 million.

Megan Foster Friedman is a healthcare analyst with the CHRT, and a co-author of the study. She says because more Michigan residents have health insurance, hospitals can collect more money for the care they provide.

“And that in the end helps everyone who has insurance, because they’re able to get more payments in and then don’t pass along uncompensated care costs to other consumers,” Friedman said.

Because of the Trump administration’s desire to repeal the Affordable Care Act, healthcare could look very different in the near future. This includes states with Medicaid expansions.

On average, states that expanded Medicaid saw a 39% decrease in these costs. The states that did not only saw a 4% decrease.

“Any potential changes to the structure of the Medicaid program or future funding for the Medicaid program would have a pretty large impact on hospital finances and uncompensated care costs,” Friedman said.