Policy expert says Medicaid is crucial to rural hospitals

September 15, 2018


Medicaid plays an essential role in financing critical access hospitals and otherwise preserving health care access in rural areas. That's according to the director of the Arizona Center for Rural Health, Dr. Daniel Derksen who oversees the State Office of Rural Health and its Small Rural Hospital Improvement Program. He also is the associate vice president for Health Equity, Outreach and Interprofessional Activities at University of Arizona Health Sciences.


In an interview with Catholic Health World, Derksen explained the extent to which health care facilities that operate on thin margins rely on Medicaid funding to keep their doors open. He said Medicaid funding is particularly important to critical access hospitals, which must be in rural areas and have 25 or fewer beds, as well as other rural and urban hospitals that have a large percentage of low-income patients in their patient mix.

Who is covered by Medicaid?
There are about 79 million Americans on Medicaid and the Children's Health Insurance Program, commonly called CHIP. And that's 79 million of a roughly 328 million total population. So, about one in four Americans receive their coverage through Medicaid programs.

About half of the enrollees in Medicaid and CHIP together are children. So these are particularly important programs for our nation's children. The next largest eligibility category is pregnant women. Many of our deliveries, especially in rural areas, are funded by our Medicaid programs.

A lot of people don't realize that about one out of four Medicaid enrollees are in the mandatory Medicaid eligibility groups of aged, blind or disabled. And while they only represent 25 percent of the enrollment, these groups generate about 63 percent of the Medicaid program costs.

Thus, changes in federal Medicaid funding affect not only women and children, but also the frail elderly and the disabled. The Affordable Care Act expanded Medicaid to include low-income childless adults.

How significant is Medicaid funding for critical access hospitals and other rural hospitals?
Rural populations tend to be older, poorer, and have lower average per capita incomes.

Medicare and Medicaid make up a very significant portion of how rural and critical access hospitals are financed. Even minor changes in how Medicare and Medicaid pay for health services can dramatically impact the financial viability of rural hospitals.

There are 85 rural hospitals that have closed in the United States since 2010, but there are significantly more that are at risk. Policy changes at the national level, such as how Medicare and Medicaid pay rural health providers and hospitals, have a disproportionate effect on rural and critical access hospitals and the elderly.

Is there evidence that health care facilities fare worse in states that didn't expand Medicaid under the Affordable Care Act?
When a state does not expand Medicaid the consequences can be devastating. For example, Texas chose not to expand Medicaid, and it has the highest number of rural hospital closures since 2010, by far. The decision not to expand Medicaid in Texas created a very large, uncompensated care/charity care burden on the rural and critical access hospitals in that state. It also affects the urban hospitals that have a mission to take care of individuals regardless of their ability to pay. That shifts the cost of care for the uninsured who need care to health providers and facilities with a mission to provide safety net services to all comers.

In the 17 states that did not expand Medicaid, their decisions shift a significant financial burden to the uninsured individuals and families who would have been covered. The leading cause of bankruptcy in the United States relates to medical costs.

Has Medicaid expansion stabilized rural health care?
In Arizona, hospitals experienced a drop from a 7.7 percent uncompensated care/charity care rate to 2.5 percent once the ACA coverage provisions (Medicaid expansion and marketplace plans) went into place in 2014. Several factors contributed to Arizona's dramatic drop in its uninsured and uncompensated/charity care rates. First, the economy improved; jobs grew; more were covered by employer-sponsored health insurance. Probably the most important factor was expanding Medicaid, in terms of the numbers and percentage of people who gained coverage. ACA marketplace coverage also contributed but was one of the smaller factors because not that many folks get their coverage through the individual ACA marketplace.

When rural hospitals close, physicians may relocate their practices. What are the human stakes for people losing that kind of access to care?
The sad reality is that once a rural or critical access hospital closes, they very rarely reopen — it's a permanent closure. It affects not only that hospital and their employees but can have a collateral effect on the pharmacy in town that no longer has enough business to keep its doors open, or the local nursing home that is no longer able to staff the facility.

There's a negative multiplier effect when a rural hospital closes. Individuals have to drive farther to get care. They may delay or go without necessary care.

In Arizona, our 15 critical access hospitals operate 17 affiliated rural health clinics that provide ready access to primary and preventive services. As a family physician, I'm particularly concerned about access to hospitals and their affiliated primary and preventive services that might prevent hospitalization or the need for emergency services. If a person had been on their blood pressure medication or their diabetes had been managed, if they had ready access to primary and preventive care, they might be able to get care earlier and avoid hospitalizations. There's a ripple effect that negatively affects health outcomes.

People's overall health is worse in communities without ready access to health services. Rural and critical access hospitals and their affiliated rural health clinics are often the solid foundation for a high-quality health system.



Copyright © 2018 by the Catholic Health Association of the United States
For reprint permission, contact Betty Crosby or call (314) 253-3490.

Copyright © 2018 by the Catholic Health Association of the United States

For reprint permission, contact Betty Crosby or call (314) 253-3490.