Year of Publication

2013

College

Martin School of Public Policy and Administration

Degree Name

Master of Public Administration

Executive Summary

This paper examines the proposed Medicaid Expansion detailed under the Patient Protection and Affordable Care Act (ACA) and whether it would be fiscally responsible for the state of Kentucky to move forward with the expansion. While the federal government plans on covering a majority of the expense for the expansion, each state will be responsible for a portion of the costs incrementally increasing from 5% in 2017 to 10% in 2020 and beyond. Analysts and think tanks have examined the healthcare act’s expansion and determined the individual states have a lot to gain financially for accepting the federal government’s proposition. These experts have detailed the potential positive impact new money from the government would have on the states from increasing healthcare jobs to increasing tax revenue and driving consumer spending. Also, they have theorized the newly covered uninsured from the Medicaid expansion will reduce uncompensated care costs to hospitals significantly. Since states and localities finance approximately 30% of uncompensated care, they stand to save a substantial amount of money that essentially would pay for a majority of the state’s share of the expansion.

Some states have previously implemented expanded state insurance programs, like the ones proposed in the ACA, permitting a platform of study by which to determine possible fiscal implications. This study examines the impact of some of these programs and how they reduced the number of uninsured individuals and their effect on uncompensated hospital costs in their particular state healthcare systems. Understanding the cause and effect of these programs is important in understanding the potential financial consequences for the state of Kentucky.

This study also provides a deeper analysis looking at the results of an expansion in Arizona. Arizona’s particular Medicaid program change assimilates the one proposed by the Federal government for 2014 and thus provides a data viewpoint that may be helpful in analyzing a policy change for Kentucky. This analysis looks at uncompensated care before and after policy implementation. The results show the percentage of uninsured patient discharges from hospitals decreased slightly while overall Medicaid discharges increased inversely. Private insurance discharges decreased inversely to the number of Medicaid patient discharges. Furthermore, the hospitals in Arizona saw a significant increase in total Medicaid hospital charges with a slight increase in uninsured charges after policy implantation in 2001. Then, through the application of a sensitivity analysis, cofounding variables were analyzed to assess causation and correlation. None of the results from the regression analysis displayed any statistically significant effect on uncompensated care. Overall, the results from the graphic analysis and the regression seem to be insignificant and inconclusive. Based on this analysis there is no certainty of saving significant amounts of state money on a reduction in uncompensated hospital care. More study is needed in order to determine if Kentucky should partake in the Medicaid Expansion.

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