Medicaid Overhaul Could Imperil Rural Health, Analysts Warn

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By Victoria Pelham

Rural health care could take a deep hit under proposed Medicaid overhauls, analysts are warning, in a way that could undermine the role of the safety-net health insurance.

The House-passed American Health Care Act, if enacted into law, would wind down Obamacare’s Medicaid expansion—which covered 11 million more Americans (1.7 million in rural areas)—and convert federal financing for the program into either per-enrollee capped allotments or lump-sum block grants, cutting an estimated $839 billion from the program by 2026.

The Center on Budget and Policy Priorities argued in a recent report that the changes could set back a rural America that more heavily relies on the program and has seen a greater uptick in Medicaid revenue and operating margins under the Affordable Care Act than its urban counterparts.

With rural care already struggling—an estimated 78 rural hospitals have closed since 2010 (most in states that chose not to expand Medicaid)—these concerns could be weighing heavily on the minds of senators who have vowed to create their own version of the House GOP’s Obamacare replacement bill, John Feore, a director with consulting firm Avalere Health, said.

On the Line

Residents in rural communities are generally older and have more health problems than their city counterparts—and are at greater risk of dying from heart disease, cancer, accidental injury, chronic lower respiratory disease, and stroke, the CBPP report said.

Meanwhile, in rural regions from Montana to Maine, West Virginia to Alaska, finding a doctor to treat them can be critically difficult.

“Those most in need of health-care services often have the fewest options available,” Alan Morgan, chief executive officer of the National Rural Health Association, said.

He noted longstanding issues with both provider shortages in small, remote communities and health disparities—and predicted the situation is only becoming more dire.

The ongoing hospital closure crisis could shutter the doors of some 700 hospitals in the next decade without intervention, according to NRHA projections. Morgan called the hospitals at “tremendous risk.”

“The real focus is just finding a way to keep the doors open of small rural hospitals,” he said.

Perfect Storm of Bad Policies

The reasons are complex and multifaceted, a “perfect storm of bad policies,” Morgan told Bloomberg BNA.

He pointed specifically to cuts in Medicare in the past five years, sequestration, health insurance exchanges under the Affordable Care Act not working as intended (especially in small areas), and the decision of many rural states to not expand Medicaid.

Feore said rural hospitals have been in an “unfortunate, unique situation” that has happened under the ACA but not because of it. High copayments and cost sharing under exchange coverage has been one barrier. But he stressed that payments from insurers are better than no payments.

But this larger picture just underscores the role Medicaid, and its growth under Obamacare, plays in these communities, analysts said.

For instance, the CBPP analysis noted that drops in uncompensated and charity care, as people signed onto Medicaid, were larger in states that chose to grow their program under the ACA. The landmark health-care law allowed states to grow their programs to those making up to 130 percent of the federal poverty level.

Those effects were more significant in rural areas.

Managers and staff at many small-town clinics and hospitals know their neighbors well so they often make sure they have health care when they need it, CBPP analysts said on a press call. That can come at the expense of their bottom lines, which often run on razor-thin margins already.

The CBPP warned that the more than $800 billion in cuts to the safety-net insurer, which covers more than 73 million Americans, would likely lead to states raising taxes, cutting Medicaid provider payments, or tightening eligibility standards.

“That’s why at this time proposals that cut millions of dollars out of rural communities just don’t make any policy sense whatsoever,” Morgan said.


If the AHCA does pass as is, analysts warn that rural hospitals will continue to close, and at a faster speed.

Others will try to consolidate and partner to protect themselves.

But there’s also reason for hope, they said.

"[Rural area concerns] always tend to gain traction and support in both parties,” Feore told Bloomberg BNA. “Senators up for re-election or Republican senators in states that expanded Medicaid and are concerned about this have rural areas in their states.

“There’s very few senators from a state without a rural area.”

The lawmakers appear to be having more of a discussion about how to treat states that have and haven’t expanded Medicaid equally and are approaching the legislation cautiously.

Morgan said he was extremely optimistic the Senate would modify the legislation to protect rural patients and providers. He said NRHA discussions with Senate offices have shown rural concerns are being taken more seriously and referenced more. That’s the case among both Republicans and Democrats, he said.

“There’s been tremendous support in the Senate for maintaining access for rural communities, and we’ve certainly seen from the national perspective the rise of rural health policy and concern of adequately addressing rural communities,” he said.

To contact the reporter on this story: Victoria Pelham in Washington at

To contact the editor responsible for this story: Brian Broderick at

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