The impact of the Affordable Care Act: Evidence from California's hospital sector

The Affordable Care Act (ACA) authorized the largest expansion of public health insurance in the U.S. since the mid-1960s. We exploit discontinuities in coverage at age 65 using a regression discontinuity based design to examine effects of the expansion on existing safety net programs, hospital use and patient health. We then link these changes to effects on hospital finances. We show that a substantial share of the Medicaid expansion substituted existing safety net programs, producing a large taxpayer funded increase in reimbursement for hospitals, with gains concentrated among government hospitals. On the benefits side, we fail to detect robust improvement in patient health, although the expansion led to substantially greater hospital and emergency room use, and reallocation of care to private and better quality hospitals.