Rural Health Policy Project

More Rural Hospitals Closing in States Refusing Medicaid Coverage Expansion

The University of North Carolina’s Rural Health Research Program tracks closures of rural hospitals across the country. From 2010 to the present there are six states with five or more rural hospital closures. Texas leads with a stunning 15 rural hospitals closed, followed closely by Tennessee (9 rural hospitals closed) and Georgia (7 rural hospitals closed).  Alabama, Mississippi and North Carolina round out the list with five rural hospital closures each.

A common characteristic of this group of states stands out – none have expanded Medicaid.  Although there are multiple factors at play in any decision to close a rural hospital (economist Austin Frakt gives a nice overview of the issue here), the fact is that the states with the most closures are all in the group of 17 states still refusing federal money available for Medicaid expansion.  And a recent federal report from the US Government Accountability Office on rural hospitals found that “rural hospitals located in states that increased Medicaid eligibility and enrollment experienced fewer closures.” This confirms work published in the journal Health Affairs earlier this year where researchers found that “…Medicaid expansion was associated with improved hospital financial performance and substantially lower likelihoods of closure, especially in rural markets…”

In fact, as our recent report on rural health coverage and Medicaid shows, states that expanded Medicaid have seen uninsured rates for low-income adults in rural areas decline three times faster compared to states that haven’t expanded Medicaid. This means rural areas and small towns in non-expansion states have higher percentages of uninsured residents – and thus higher percentages of people who when they get seriously ill or injured come to the local hospital with no insurance coverage for the inevitable large bills. And the higher the percentage of uninsured people served by a rural hospital, the harder it is for that hospital to stay in business.  

There are huge numbers of state residents who still lack affordable coverage and fall into this Medicaid coverage gap.  In total, if the 17 holdout states expanded Medicaid, researchers estimate over two million  people would eventually gain affordable health coverage.  

The stories of rural hospital closures and the adverse impact on the communities they serve are compelling. Whether in Kansas, Mississippi, Texas, Alabama, Georgia, or beyond, the toll on the health care available to rural residents and small town economies overall is significant. The research continues to accumulate about the effects of Medicaid expansion. One of the increasingly clear lessons is that states accepting federal Medicaid funding to expand coverage are shoring up the financial stability and viability of rural hospitals in addition to helping their rural residents access quality, affordable health care.

Adam Searing is an Associate Professor at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.