Medicaid is Crucial to Rural Hospitals

Rural hospital closings can be a matter of life or death.

Residents in these remote locations may have to drive 100 miles or more for emergency medical care. One new study found that hospital closings increase mortality in rural areas by 6 percent. No such impact occurred in urban areas with multiple medical centers.

Both urban and rural hospitals serving poor and low-income patients face myriad financial pressures, led by Medicare and Medicaid’s relatively low reimbursement rates for their disproportionate numbers of older and sicker patients. The 2013 federal budget, which cut Medicare reimbursements for hospitals and physicians by 2 percent, compounded the problems.

But what has become increasingly clear in rural areas is that the option given to states under the Affordable Care Act (ACA) to expand their Medicaid-covered populations of high-need patients has created a dividing line between the most vulnerable hospitals and the survivors, said Brock Slabach, senior vice president of the National Rural Health Association, a hospital trade group.

With closures accelerating across the country over the past decade, 24 of the 31 rural hospitals that closed in 2018 and 2019 were located in the minority of states (14) that have not expanded their Medicaid programs, according to the Sheps Center for Health Services Research at the University of North Carolina, which tracks hospital closures.

In contrast, the ACA has bolstered rural hospitals in expansion states by cutting their uninsured populations roughly in half by bringing in a fresh supply of federal and state revenues to insure more patients under Medicaid.

Rural hospitals’ finances are actually improving in this diverse group of expansion states, which cut across traditional ideological fault lines. A 2018 study in the journal Health Affairs found that expansion states have seen “improved hospital financial performance and substantially lower likelihoods of closures, especially in rural markets and counties.”

“While there are a lot of different factors playing into rural hospital closures, Medicaid financing is huge,” said Adam Searing at Georgetown University’s Center for Children and Families. “Closing them down is a crisis and deprives some people of some of the most important health care that they need.”

When a hospital closes, residents in small towns and rural areas not only lose access to critical care. They face financial consequences too. Driving long distances for medical care is costly to patients, who must take hours off from work to drive for miles, pay for gas, arrange childcare, drive a parent to a doctor’s office, or visit family in the hospital.

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