The Harris-Walz campaign has revealed its plan to leverage big-government programs to attract doctors to rural hospitals. But will there be any rural hospitals left?
Recruiting doctors and nurses to live and work in rural communities has been a challenge for decades. But that challenge pales in comparison to the dangers that Medicaid expansion poses to rural health care, especially with the ongoing threat of rural hospital closures.
Since Obamacare was enacted in 2014, 40 states have expanded Medicaid beyond the traditional populations of seniors, individuals with disabilities and children in low-income homes to also include able-bodied adults. Income limits for these able-bodied exceed the poverty line, and most of these welfare recipients don’t work at all. This expansion has steadily diminished the safety net, high-quality health care and state budgets.
Able-bodied adults — who could obtain free or heavily subsidized health coverage through exchange plans or employer-sponsored plans — have merged into the line for services alongside truly needy populations who rely on the program.
Waiting lists remain long for vulnerable individuals, and health outcomes haven’t improved. Additionally, many high-quality health care providers simply do not accept Medicaid. State budgets have been busted time and again as actual Medicaid expansion costs shatter projections, leaving less money in state budgets to pay for other crucial services like schools and public transportation.
Health care is a quickly dwindling resource in the nation’s rural communities, and Medicaid expansion has hurt, not helped, those rural hospitals.
Hospitals don’t run on goodwill and fairy dust. They need to cover their costs of providing services, and an influx of patients shifted from private health coverage to the lower reimbursement rates under Medicaid (roughly 60 percent of what private health coverage reimburses) means significant budget shortfalls for hospitals, especially those in rural areas.
Hospitals in non-expansion states simply perform better. Between 2013 — before expansion — and 2021, profits in expansion-state hospitals dropped by two-thirds, sinking profit margins from 6.2 percent to a mere 1.4 percent. Meanwhile, hospitals in non-expansion states saw their profits more than double and saw their profit margins jump to seven percent.
The Harris-Walz team’s plan aims to bring more health care workers to rural areas. But that effort is irrelevant if hospitals can’t bring in enough revenue to remain operational.
Nearly 50 hospitals in Medicaid expansion states closed their doors between 2014 and 2022 due to financial challenges. In the expansion-state rural hospitals that remain open, one in four is at risk of permanent closure. The dramatic shortfalls in these hospitals have forced providers to make difficult decisions about cutting hours, cutting jobs, or closing their doors entirely.
Gov. Tim Walz’s home state of Minnesota is no exception. It expanded Medicaid in 2014, shortly after the passage of Obamacare. More than two-thirds of Minnesota’s hospitals have negative operating margins. Forty-five percent of rural Minnesota hospitals do not offer maternity care, and another rural hospital closed its inpatient services — with more at risk of closing or limiting services — leaving even fewer hospital beds for those who need them.
Unsurprisingly, Minnesota spends a significantly higher percentage of its state budget on Medicaid than other states—more than 30 percent of its budgetary expenditures—and is paying the price in shuttered or severely limited access to rural hospitals.
Without addressing the dramatic influx of able-bodied adults to a program intended for vulnerable populations, no grant, scholarship, or loan forgiveness will be enough to attract doctors to hospitals at risk of closure.
The diagnosis is simple, and the prescription is clear: Medicaid expansion is not helping rural hospitals stay open. Instead, it causes them to close even faster. Leaders at the state and federal levels must get serious about rolling back the expansion of Medicaid to millions of able-bodied adults and refocusing the program on the truly needy. Until then, no campaign promises or taxpayer-funded Band-Aids will bring rural American communities the health care they need.
Hayden Dublois is Data and Analytics Director at the Foundation for Government Accountability.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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