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Some red state hospitals pitch Medicaid expansion to solve rural health woes


Illustration of a red cross with a metal door rolling closed in front of it

Illustration: Natalie Peeples/Axios

Hospitals in some non-Medicaid expansion states are pitching expansion as a way to help solve the rural health crisis. But the industry is hardly speaking with one voice.

Driving the news: Facilities with fewer commercially insured patients that treat a large number of uninsured people see expansion as a potential lifeline in tough economic times.

Yes, but: Republican lawmakers in the holdout states continue to oppose enlarging their Medicaid rolls, citing higher state costs of covering a bigger population.

  • And hospital associations in North Carolina and Florida have opposed expansion plans, either out of concern about alienating key lawmakers or because the plans could bring other changes that disrupt dollars flowing to their members.

State of play: South Dakota voters approved a Medicaid expansion ballot measure this fall, leaving 11 non-expansion states.

  • Democratic governors in North Carolina and Kansas think they may be wearing down Republican opposition, Politico reports, but still face uphill battles when the new legislative sessions begin.

Zoom in: Medicaid expansion can bring dollars into a state’s health care system, even if the program pays only a fraction of the actual cost of care.

  • Numerous studies show that Medicaid expansion can have a positive financial impact on hospitals’ operating and profit margins, particularly smaller rural facilities, Robin Rudowitz, vice president at the Kaiser Family Foundation, told Axios.
  • The program could provide a reprieve for hospitals that were kept afloat in part by federal pandemic aid that’s now drying up.
  • “We have hospitals with 12 days cash on hand. We’ve lost a nursing home this year. We have seen decreased services. We’ve lost OB services in a few places, and we’ve seen over the years the decrease in mental health,” Wyoming Hospital Association vice president Josh Hannes told state lawmakers last month, per Politico.
  • Expanding Medicaid in other states has also led to a significant decline in uncompensated care costs, as well as improved states’ health outcomes, including overall mortality.

Yes, but: Medicaid expansion is not necessarily a silver bullet that will rescue every struggling facility.

  • Some state hospital associations are seeking other types of relief, from cuts in hospital bed taxes or higher reimbursements for existing Medicaid beneficiaries.

Of note: Rural, small hospitals have the most to gain from Medicaid expansion, because they serve a smaller patient populations with a larger pool of uninsured people.

  • Congress sweetened the deal for non-expansion states in the American Rescue Plan Act, with a 5% increase in the federal Medicaid Assistance Percentage for the state’s current Medicaid recipients, which lasts for two years.
  • In Texas, whose uninsured rate is the highest in the nation, hospital leaders think Medicaid expansion could help cover many in the working class whose jobs do not offer health plans.
  • “If you could get those folks coverage at a Medicaid rate it would obviously help the financial situations of (rural) hospitals, and if you could get them to a medical home you could deal with more acute medical conditions going forward,” John Hawkins, president of the Texas Hospital Association, told reporters last week.

The bottom line: While rural hospitals all over are facing headwinds, those in non-expansion states are bearing the brunt of the pain. And while there is a potential lever for those states, it doesn’t appear likely their elected officials are willing to pull it.



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