If Congress eliminated Medicaid expansion without increasing disproportionate share hospital (DSH) payments or other subsidies, more hospitals will close, especially in rural areas, according to a new report in Health Affairs.
Potential rural hospital closures will leave patients without access to nearby hospitals, which will result in poor healthcare in those regions regardless whether they are insured. At least 83 rural hospitals have closed since 2010 and hundreds more are at risk of closing.
Since the Affordable Care Act was enacted and allowed states to expand Medicaid, 33 states and the District of Columbia have chosen to do so.
The researchers from the University of Colorado said Medicaid expansion prevented hospital closures as previously uninsured people were covered by Medicaid. This also meant less uncompensated care, which “strengthens hospitals’ financial position,” according to the report.
Analyzing hospital closure and financial performance data between 2008-2016, the report found Medicaid expansion improved hospital finances and meant a substantially lower chance that hospitals — especially rural facilities — closed.
The researchers surmised that congressional efforts looking to reform Medicaid “should consider the strong relationship between Medicaid coverage levels and the financial viability of hospitals.” Going back to pre-ACA Medicaid levels would “lead to particularly large increases in rural hospital closures.”
The study is the latest to show that Medicaid expansion states not only improved health insurance coverage, but also the financial situation of hospitals. But uncompensated care is on the rise, and reversing the gains made by Medicaid expansion could further exasperate the trend. The American Hospital Association recently found that uncompensated care in community hospitals increased in 2016, which was the first time it’s increased since 2013.
With Republicans controlling the White House and both houses of Congress, there is concern cuts to entitlement programs like Medicaid this year are next on the agenda. House Speaker Paul Ryan (R-Wis.) suggested addressing entitlements would be a priority in 2018, but Senate Majority Leader Mitch McConnell (R-Ky.) said the Senate does not plan on doing so this year.
Some states such as Alabama, Florida and Kansas have tried to pass Medicaid expansion, but the proposals died for varying reasons, including governor veto or lack of state funding to launch an expansion program.
None of the 17 states without Medicaid expansion have imminent plans to expand the program, though Virginia is closest. Virginia Gov. Ralph Northam (D) supports expanding Medicaid and Democrats picked up seats in the legislature in 2017.
The latest state to approve Medicaid expansion was Maine, whose voters last year approved a ballot initiative to expand Medicaid. However, Maine Gov. Paul LePage (R) has refused to implement the expansion without the Legislature finding funding without raising taxes or dipping into reserves. Maine Democrats have threatened to sue if the governor blocks Medicaid expansion.