Medicaid Expansion Decreased Surgical Catastrophic Spending

By increasing the coverage rate, Medicaid expansion may protect patients from surgical catastrophic spending, an article published in Health Affairs found.

The researchers used data from the Healthcare Cost and Utilization Project (HCUP) from the Agency for Healthcare Research and Quality, using the Fast Stats database and State Inpatient Databases. The study drew the Fast Stats data from almost 2,000 state-quarter observations and the State Inpatient Database data from over 1.4 million adult surgical hospitalizations.

The study confirmed that uninsured patients are at high financial risk for catastrophic healthcare spending on surgical procedures.

Comparing the uninsured patients with insured patients, the results highlighted key differences between why each population required surgery and the circumstances under which they received surgery.

More than one out of every five uninsured patients who came to the hospital for surgery were admitted on the weekend, with seven out of ten coming through the emergency department.

Privately insured patients mostly came to the hospital for orthopedic surgeries, most of which are elective. In contrast, a third of all uninsured patients came for more emergency procedures, such as cholecystectomies or appendectomies.

Another major difference between the uninsured and privately insured populations was that the median hospital charges for the uninsured population tended to significantly exceed the population's average income. Over 99 percent of cases in the uninsured population were considered catastrophic due to out-of-pocket spending that exceeded 10 percent of the patient’s income.

The study also found that Medicaid expansion may lower the uninsurance rate and may decrease patients’ risk of experiencing catastrophic spending.

Comparing outcomes before Medicaid expansion and after Medicaid expansion, the researchers found that expansion states saw a decrease in adult uninsured surgical discharges. Additionally, the uninsurance rate itself dropped in Medicaid expansion states, which previous studies have corroborated.

The share of nonelderly adults that experienced a surgical discharge decreased by 6.2 percent after states implemented Medicaid expansion. Similarly, the number of uninsured surgical discharges among nonelderly adults dropped by 7.9 individuals per 10,000 people. This was linked to a 45 percent relative reduction in uninsured surgical hospitalizations that occurred prior to Medicaid expansion.

The researchers noted that even nonexpansion states experienced decreased uninsurance after Medicaid expansion took effect. They attributed this to the nationwide influence of the Affordable Care Act’s state health insurance marketplaces.

“Our study differs from the prior literature because of our ability to identify states to estimate the impact of Medicaid expansion independent from other provisions of the ACA and in our use of population-level data to determine the population rate of these uncommon but potentially financially devastating instances of uninsurance at the time of surgery,” the researchers stated.

Based on these estimates, the study projected that if nonexpansion states had adopted Medicaid expansion, states could have avoided around 50,000 catastrophic financial burdens that resulted from uninsured surgeries in 2019.

Catastrophic spending is on the rise in other clinical areas outside of surgical procedures, namely in Medicare Part D drug spending. 

A Kaiser Family Foundation study found that a small beneficiary population saw high catastrophic drug spending and that this population has been growing. In 2010, 400,000 beneficiaries exceeded the catastrophic spending benchmark. By 2019, this population totaled 1.5 million beneficiaries.

Higher-cost new drugs, rising costs of existing drugs, and attempts to phase out the Part D coverage gap all may have contributed to this trend in catastrophic spending.

However, the Affordable Care Act reduced catastrophic spending for some beneficiaries. 

After the law extended marketplace subsidies to low- and middle-income individuals, overall out-of-pocket healthcare spending dropped by a little over 17 percent and catastrophic spending decreased by nearly 30 percent, according to a previous Health Affairs study.

Nevertheless, six percent of low-income individuals still experienced catastrophic spending after the Affordable Care Act subsidies went into effect.