Medicaid Expansion Won’t Stop Rural Hospital Closures

“Since 2014, dozens of hospitals have closed in states that haven’t expanded Medicaid. Yet their stated reasons almost always have nothing to do with Medicaid expansion. Damage from natural disasters, declining business and fraud, among many other factors, have caused hospitals to close. Only four hospitals in non-expansion states directly attributed their closures to a lack of Medicaid expansion. Two of them later were alleged to have engaged in wide-scale fraud and financial mismanagement, casting doubt on their earlier statements.

Even more telling is what happened in the nearly 40 states that did expand Medicaid before the start of this year. Despite the assurances of liberal activists, nearly 50 hospitals have closed in these states since expansion passed, including more than a dozen in rural areas. Missouri voted to expand Medicaid by ballot initiative in August 2020, with implementation beginning a little more than a year later. Yet two rural hospitals closed in September 2022, well after expansion took effect.

The situation will surely worsen. According to data from the Center for Healthcare Quality and Payment Reform, 1 in 4 rural hospitals in expansion states are still at risk of closure. A 2019 Navigant study found that the top five states at risk of losing community-essential rural hospitals are all expansion states. [..]

The program’s reimbursement rates are about 60% of what private health insurance pays, often leaving hospitals with large losses on Medicaid patients. Nationwide, more than 18 million able-bodied adults and counting have enrolled in the program due to expansion, and each new recipient potentially adds red ink to a hospital’s balance sheet.

[..] hospital advocacy groups have joined Democrats in vigorously demanding expansion. The promise of federal money in the short term—and the resulting bonuses and pay bumps for hospital executives—is apparently more important than future stability.

Democrats won’t stop until they convince all 50 states to expand Medicaid. As one activist told the New York Times in March, “this argument about rural hospital closures has been an incredibly compelling argument to voters.” That same story, which focused on Mississippi, was titled “A State’s Choice to Forgo Medicaid Funds Is Killing Hospitals.” Mississippi and Alabama are likely the next two states in Democrats’ sights.”

Full editorial, H Dublois – data and analytics director at the Foundation for Government Accountability, Wall Street Journal, 2023.4.29-30.