Rural Blog: Study says a state’s failure to expand Medicaid hurts rural hospitals more than urban

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If your state didn’t expand Medicaid under federal health reform, that is likely hurting your rural hospitals more than it hurts urban hospitals, says a study by researchers at the University of North Carolina, published in the journal Health Affairs.

Researchers “found that rural hospitals saw an improved chance of turning a profit if they were in a state that expanded Medicaid—while in city-based hospitals, there was no improvement to overall profitability,” Shefali Luthra reports for Kaiser Health News.

“Across the board, hospitals earned more if they were in a state where more people had coverage and saw declines in the level of uncompensated care they gave.” (UNC graphic: Operating margins for rural and urban hospitals, by Medicaid expansion status)

medicaid

The study found that “increases in Medicaid revenue were greater among rural hospitals than urban hospitals, and the decrease in the proportion of costs for uncompensated care were greater among urban hospitals than rural hospitals.”

“After Medicaid expansion, the percentage of total discharges covered by Medicaid increased among rural hospitals in states that expanded Medicaid,” the study found. “However, the Medicaid expansion had no effect on uncompensated-care costs or operating margins for rural hospitals. The only reduction in uncompensated-care cost as a result of Medicaid expansion was found among urban hospitals in expansion states.”

The study looked at how many Medicaid patients are discharged, levels of uncompensated care, and how well the institutions did financially. It examined more than 14,000 annual cost reports from January 2011 to December 2014, one year after eligible states could have expanded their Medicaid programs, Luthra writes.

“In states expanding Medicaid, rural hospitals saw a greater increase in Medicaid revenue than urban hospitals did,” Luthra writes. “City-based facilities save a higher percentage than rural hospitals with the reduction in uncompensated care, though that change did not translate into improved operating margins for urban hospitals.”

One likely factor is that rural hospitals serve more low-income people—who weren’t eligible for insurance before expansion, but have since been covered. Rural hospitals also are historically more likely to operate at a loss than urban hospitals.

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The Rural Blog is a digest of events, trends, issues, ideas and journalism from and about rural America, from the IRJCI, based at the University of Kentucky. The Institute for Rural Journalism and Community Issues is an extension program for rural journalists and news outlets. It takes no positions on issues and advocates only for strong news coverage, responsible commentary and things that make them possible, such as open-government laws. For more information see www.RuralJournalism.org.

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