The Harris-Walz campaign has announced a plan to utilize government initiatives to attract healthcare professionals to rural hospitals. However, the survival of these hospitals remains in jeopardy. Enlisting doctors and nurses to rural communities has been a long-standing challenge, one now overshadowed by the threats posed by Medicaid expansion. The future of rural healthcare is at stake, with hospital closures looming large.
Since the Affordable Care Act (Obamacare) was enacted in 2014, 40 states have broadened Medicaid eligibility, previously limited to seniors, disabled individuals, and low-income children, to include able-bodied adults. Many of these newly eligible persons earn above the poverty line and do not participate in the workforce. This expansion has eroded the safety net, strained state budgets, and has resulted in longer waiting lists and no significant improvements in health outcomes for vulnerable populations.
Furthermore, numerous top-tier healthcare providers avoid Medicaid due to its lower reimbursement rates. State budgets have frequently overshot projections due to the actual costs of expansion, thereby diverting funds from crucial services like education and public transport. This financial strain particularly impacts rural hospitals, where healthcare is already scarce. Medicaid's expansion has exacerbated this scarcity rather than alleviating it.
Hospitals require more than goodwill; they operate on financial sustainability. The shift of patients from private insurance to Medicaid's lower reimbursement has created financial shortfalls, especially in rural hospitals. Between 2013 and 2021, hospitals in states that expanded Medicaid saw profits shrink drastically, with margins falling from 6.2% to 1.4%. Conversely, hospitals in states without expansion saw profits and margins rise significantly.
The Harris-Walz strategy to recruit healthcare workers to rural areas is undermined if hospitals cannot sustain operations due to financial losses. Nearly 50 hospitals in states with expanded Medicaid faced closures from 2014 to 2022 due to these financial pressures. Of those remaining, one in four is at risk of closing permanently. This has led to hard choices regarding reductions in services or complete closures.
In Minnesota, Gov. Tim Walz's home state and one of the early adopters of Medicaid expansion, a significant number of hospitals are facing negative margins. A large portion of rural hospitals in Minnesota lack maternity care facilities, and some have ceased inpatient services entirely, leading to even scarcer hospital resources. Minnesota allocates over 30% of its state budget to Medicaid, the highest among states, resulting in limited rural hospital access.
Addressing the influx of able-bodied adults into a system initially meant for vulnerable groups is crucial. Reforms targeting the reduction of Medicaid’s scope to indeed prioritize the vulnerable are required. Until serious federal and state actions address Medicaid's current structure, no temporary policy adjustments or financial incentives will adequately support rural hospitals' operations.
Hayden Dublois, Data and Analytics Director at the Foundation for Government Accountability, emphasizes the necessity for policy reform. These perspectives are independent of the Daily Caller News Foundation’s official position.
