Medicaid’s vital role as an insurer for low-income families, people with disabilities and chronic health conditions, and individuals in need of long-term services and supports in the nation’s health care system has continued to grow over the past decade. According to federal administrative enrollment data, one-quarter of all residents of the United States and more than half of all children — nearly 94 million people — were covered by Medicaid and the Children’s Health Insurance Program (CHIP) as of March 2023.

This is especially the case in rural areas where residents are less likely to have jobs with health coverage and more likely to be uninsured or underinsured.  They also face numerous challenges in accessing needed health care. People living in rural areas travel further for appointments and are more likely to miss out on needed health care because of trouble finding transportation, while lower rates of internet connectivity can limit access to telehealth services and make it harder to comply with state administrative renewal requirements. Children in rural areas in particular are less likely than children in urban areas to have had a checkup and a dentist visit in the past year. And in addition to the stress uninsurance places on a family, higher uninsured rates in rural areas can strain hospital finances by increasing the share of uncompensated care, and rural hospital closures can contribute to even more serious provider shortages. Rural counties also tend to have higher poverty rates, so families in these areas are more likely to qualify for Medicaid/CHIP. Medicaid can be a lifeline amidst these challenges by helping to provide states, hospitals, and providers with resources they need to deliver care and by making sure that enrollees have the affordable and comprehensive coverage they need to see doctors, fill prescriptions, and manage chronic conditions.

This issue brief analyzes data from the U.S. Census Bureau’s American Community Survey to analyze the role Medicaid/CHIP play in providing health coverage to residents of small towns and rural areas. Medicaid enrollment has grown significantly in recent years due to the continuous coverage protection enacted under the Families First Coronavirus Response Act, which helped avoid expected increases in the uninsured rate during the pandemic. But states are currently facing the historic challenge of redetermining Medicaid eligibility for all beneficiaries as part of the unwinding process. While some beneficiaries will lose their Medicaid coverage because they are no longer eligible, many others, including children, will end up disenrolled for procedural reasons even though they remain eligible. Early data from states’ unwinding processes have already found high rates of procedural disenrollments—and Medicaid enrollment declines among children —in many places. This will pose a dire risk to small towns and rural areas, threatening coverage and access for low-income residents and threatening the viability of rural health systems.

Medicaid’s Importance for Rural Areas Has Grown

As of 2020-2021, Medicaid/CHIP provided coverage for a larger share of both adults and children in small towns and rural areas than in metropolitan counties nationwide and in every state examined.  This disparity was even wider for children. Among children, Medicaid/CHIP covered 47% of children in rural areas compared to 40% in metro counties. See Figure 1. This is a 2-percentage point increase from the share of children covered by Medicaid/CHIP in both small towns and rural areas (45%) and metro counties (38%) in 2014-2015.

Adults in rural counties also relied on Medicaid/CHIP more than adults in urban counties, with 18% covered by Medicaid/CHIP compared to 15% of adults covered in metro counties. See Figure 1. Medicaid/CHIP coverage among adults has also increased in rural areas, from 16% covered in 2014-2015, while coverage in metro counties has held steady.

More Rural Residents Rely on Medicaid/CHIP in Certain States

In 2020-2021, among children who live in small towns and rural areas, those who lived in states in the South and Southwest tended to have higher rates of Medicaid/CHIP coverage. For example, in South Carolina, New Mexico, Louisiana, and Arkansas, Medicaid/CHIP covered at least 6 in 10 children in small towns and rural areas. See Table 1. In Arkansas, in addition to Medicaid/CHIP covering the highest share of rural children in the United States, there was also the biggest gap between Medicaid/CHIP coverage for children in small town/rural (65%) and metro (50%) areas.

At the county level, children’s Medicaid/CHIP coverage in small towns and rural areas ranged from 13% in Burke and Renville counties in North Dakota to 83% in McKinley and Socorro counties in New Mexico. Nine out of the top 20 counties with the highest rates of Medicaid/CHIP coverage for rural children were in New Mexico, with other top counties located in Kentucky (4), Louisiana (2), West Virginia (2), Arkansas (1), Alaska (1), and South Carolina (1). See Appendix 1 for a list of the top 20 counties, and see our county maps for data on all counties.

The states with the highest share of adults covered by Medicaid in small towns and rural areas were also located in the South and Southwest. Louisiana, Kentucky, and New Mexico all covered about one-third of rural adults. See Table 2.

At the county level, Medicaid/CHIP coverage rates ranged from just 4% of adults in small town/rural areas covered in Gray County, Kansas; Stanley County, South Dakota; and Crook County, Wyoming (all ACA Medicaid non-expansion states at the time of the analysis), to 58% of adults covered in Wolfe County, Kentucky. In total, 13 of the top 20 counties with the highest Medicaid/CHIP coverage rates were located in Kentucky, along with several in Louisiana (3), New Mexico (2), Alaska (1), and West Virginia (1). See Appendix 1 or county maps.

Kentucky, unlike many of its neighboring Southern states, adopted the Medicaid expansion covering adults with incomes up to 138% of the federal poverty level in 2019. Among the 10 states that have still not expanded Medicaid, the median income eligibility level for parents was about 35% of the federal poverty level of poverty (or about $8,700 annually for a single adult in 2023). Nationwide, more than 1 in 5 rural adults living in an expansion state were covered by Medicaid, compared to just 13% of rural adults in non-expansion states. See Figure 2.

Conclusion

Medicaid/CHIP are more important than ever for the children and families living in small towns and rural areas. Medicaid enrollment has grown in recent years as the continuous coverage protection helped many more people stay insured, but these coverage gains are at dire risk during the current unwinding process.

Because more people in rural areas are covered by Medicaid, and because of additional barriers to renewing coverage like having to travel further to eligibility offices or having less internet access, people living in rural counties may be more likely to be disenrolled for procedural reasons despite still qualifying for coverage. Rural children, who are even more likely to remain eligible, may be especially at risk of experiencing a lapse in coverage and becoming uninsured for a time. Working together with stakeholders and advocates in rural areas; monitoring and publishing data on enrollment and renewals broken down by age and geography; successfully implementing 12-months continuous eligibility for children in those states that have not already adopted it; and adopting policies like Medicaid expansion and multi-year continuous eligibility can all help ensure that eligible families remain covered.

Methodology

This analysis uses 2020-2021 American Community Survey (ACS) Public Use Microdata Sample (PUMS) data to model the estimated share of children (under age 19) and non-elderly adults (ages 19-64) covered by Medicaid in counties classified as either “Metro” or “Small Town/Rural Area.” County estimates were developed with the assistance of Mark Holmes, PhD and follow the general approach used previously in, e.g. Hoadley J, Alker J, and Holmes M. "Health Insurance Coverage in Small Towns and Rural America: The Role of Medicaid Expansion." 2018.  Georgetown University Health Policy Institute, Center for Children and Families.

In the first step of the estimation, a predictive model is developed that relates social, demographic, and economic factors to individual Medicaid coverage. Two years of ACS data are used to improve sample sizes; however, because only experimental data were released in 2020 due to data quality issues related to the pandemic, 2020 data is weighted half as much as 2021 data and all Medicaid coverage estimates are scaled to 2021 state-level estimates. ACS PUMS data were used to identify demographic characteristics associated with the likelihood that an individual is covered by Medicaid. In the second step, these individual-level relationships are applied to area-level values from corresponding county-level ACS summary data. These are used to estimate the number and share of individuals with Medicaid coverage in each county; county estimates were further adjusted to match state-level targets.

Counties are classified as either “Metro” or “Small Town/Rural Area” using the Missouri Census Data Center’s Master Area Block Level Equivalency (MABLE) Geocorr 2022 data engine. “Small Town/Rural Area” combines the “micropolitan” and “noncore” designations into a single category representing counties with central urban areas of fewer than 50,000 people. Four states (DC, DE, NJ, RI) have no counties classified as a “Small Town/Rural Area.”

[1] Research shows that survey data, including the American Community Survey data used in this brief, consistently undercount Medicaid/CHIP coverage compared to administrative enrollment counts. This undercount, however, increased during the pandemic and young children may be especially likely to be undercounted in other Census data sources.