BUSI 304 Week 4 Case Study 1 Example

Case Study 1: Should a Holdout State Expand Medicaid? A Policy Analysis of Coverage, Hospitals and Cost

Case Summary

The state in this case is one of the ten that have not expanded Medicaid under the Affordable Care Act. About 300,000 adults with incomes below 138% of the federal poverty level would gain eligibility if it did. Several rural hospitals have closed in the past decade, and two more have announced cuts. The governor opposes expansion, citing long-term cost; a coalition of hospitals, physicians and business groups supports it; and the legislature is divided. Many of the adults who would qualify work in jobs without health benefits, in restaurants, building trades and home health work, and earn too much for the state's current Medicaid rules but too little to afford private coverage. The case asks the analyst to define the problem, identify stakeholders, evaluate options and make a recommendation.

Question 1: What Is the Policy Problem?

McLaughlin and McLaughlin (2015) stress that a policy analysis begins by defining the problem carefully, because the definition shapes which solutions seem reasonable. Here the problem is not simply that people are uninsured. It is that low-income working adults lack coverage, which delays care for chronic conditions, shifts costs to hospitals as uncompensated care and weakens the finances of hospitals that rural communities depend on. Defined this way, the problem has a health dimension, a financial dimension and a geographic one. A narrower definition, such as "the state's uninsured rate is high," would invite narrower solutions, such as outreach for existing programs, that leave the hospital and rural access problems untouched. The textbook's interdisciplinary approach also asks the analyst to notice the political definition each side prefers: opponents frame the issue as fiscal risk, supporters as access and fairness.

Question 2: Who Are the Stakeholders?

The uninsured adults themselves have the most at stake but the least political voice. Hospitals, especially rural ones, would gain paying patients and lose uncompensated care. Physicians would see more insured patients. The governor and budget officials worry about the state's 10% share of costs and about future federal changes. Taxpayers and employers have interests on both sides: higher state spending, but also a healthier workforce and federal dollars flowing into the state economy. Insurers and managed care organizations would gain enrollees. Counties and local health departments also matter, since they often fund indigent care and would see that burden shift. Finally, legislators themselves are stakeholders: those representing rural districts with struggling hospitals face different pressures from those representing suburban districts where the issue is mainly about the state budget. Mapping these interests helps explain why the legislature is divided even though most of the evidence points one way.

Question 3: What Are the Options?

Three options are realistic. Option A is to keep the current policy. Option B is full expansion under the Affordable Care Act. Option C is expansion through a federal waiver with conditions such as premiums or work requirements. Each should be judged against four criteria: coverage gained, health effects, hospital stability and net cost to the state. A fifth criterion, political feasibility, matters in practice, since an option that cannot pass the legislature does not help anyone, and Option C is often proposed precisely because it may attract votes that Option B cannot.

Question 4: What Does the Evidence Say?

On hospital stability, the evidence is strong. Keesee et al. (2024) found that in 2019, rural hospitals in non-expansion states reported uncompensated care equal to 6.28% of operating expenses, compared with 2.55% in expansion states, and that the 14 states with the highest uncompensated care had all declined expansion. Lindrooth et al. (2018) found that expansion was associated with better hospital finances and a much smaller chance of closing, most of all in rural areas with many uninsured adults before expansion. Expansion is not a cure for every service line, however; Carroll et al. (2022) found that it had little lasting effect on closures of hospital obstetric units, which need targeted support. That finding matters for this state, where two of the threatened hospitals are the only places to give birth in their counties.

On health, Jiang et al. (2023) reviewed 30 studies and found that expansion was generally associated with more insurance coverage, more screening and treatment of cardiac risk factors and lower cardiac morbidity and mortality outside acute care. On cost, the federal government pays 90% of costs for the expansion population, and states that expanded have offset part of their share through savings in other programs and through economic activity generated by federal funds.

Scored against the criteria, Option A performs worst on coverage, health and hospital stability and best only on short-term state spending. Option B performs best on coverage, health and hospitals at moderate cost, and its cost is offset in part by reduced state spending on uncompensated care and on programs that now cover some of the same people. Option C gains some coverage, but conditions such as work requirements add administrative cost and tend to reduce enrollment among eligible people, weakening the benefits that justify expansion. Option C may still be worth considering if it is the only version that can pass, but the analysis should be honest that its conditions trade coverage for political support.

Question 5: Biblical Integration

Scripture repeatedly calls God's people to care for the poor and the sick. The law of Moses commanded Israel to open its hand to the poor and needy in the land (English Standard Version Bible, 2001/2016, Deuteronomy 15:11), and Jesus described caring for the sick as caring for Him (English Standard Version Bible, 2001/2016, Matthew 25:36). These passages do not dictate a particular insurance design; Christians can disagree about the role of government. They do, however, set a standard for the criteria: a policy that leaves working adults without access to care, and lets rural hospitals close, should carry a heavy burden of justification. The question is not whether the state can afford to expand, but whether its communities can afford for it not to.

Question 6: Recommendation

I recommend Option B, full expansion, with two additions: a state fund for rural obstetric services, since expansion alone does not keep those units open, and a reserve to protect the budget if the federal match changes. The strongest objection is long-term cost; the answer is that the state's 10% share buys coverage for hundreds of thousands of residents and stabilizes hospitals that would otherwise draw on state funds in a crisis. The state should measure enrollment, uncompensated care, rural hospital margins and preventive care use annually for the first three years and report the results to the legislature. Implementation would also require outreach through community health centers and hospitals, which see eligible adults every day, and a simple online enrollment process. If the evaluation shows that costs exceed projections or benefits fall short, the legislature can revisit the policy with real data rather than forecasts.

References

Carroll, C., Interrante, J. D., Daw, J. R., & Kozhimannil, K. B. (2022). Association between Medicaid expansion and closure of hospital-based obstetric services. Health Affairs, 41(4), 531-539. https://doi.org/10.1377/hlthaff.2021.01478

English Standard Version Bible. (2016). Crossway. (Original work published 2001)

Jiang, G. Y., Urwin, J. W., & Wasfy, J. H. (2023). Medicaid expansion under the Affordable Care Act and association with cardiac care: A systematic review. Circulation: Cardiovascular Quality and Outcomes, 16(6), e009753. https://doi.org/10.1161/CIRCOUTCOMES.122.009753

Keesee, E., Gurzenda, S., Thompson, K., & Pink, G. H. (2024). Uncompensated care is highest for rural hospitals, particularly in non-expansion states. Medical Care Research and Review, 81(2), 164-170. https://doi.org/10.1177/10775587231211366

Lindrooth, R. C., Perraillon, M. C., Hardy, R. Y., & Tung, G. J. (2018). Understanding the relationship between Medicaid expansions and hospital closures. Health Affairs, 37(1), 111-120. https://doi.org/10.1377/hlthaff.2017.0976

McLaughlin, C. P., & McLaughlin, C. D. (2015). Health policy analysis: An interdisciplinary approach (2nd ed.). Jones & Bartlett Learning.