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FACT SHEET: Medicaid Works For Rural Americans

By April 17, 2023No Comments

This April marks the 5th annual Medicaid Awareness Month. The Affordable Care Act’s (ACA) Medicaid expansion has been a critical part of working towards the goal of every American having access to affordable and quality health insurance, but Republicans in 10 states have not yet implemented expansion of the program, blocking millions from coverage and access to essential health care. Holdout states are located in the southern and midwest regions with significant rural populations. 60 million Americans reside in rural areas across the United States.

By The Numbers

  • Millions Of Rural Americans Depend On Medicaid. Nearly 14 million Medicaid enrollees reside in rural areas.
  • Medicaid Strengthens Health In Rural America. Overall, rural residents have worse health outcomes and tend to be older, poorer, and sicker than those in urban areas.
  • Rural States Need Medicaid. Uninsurance rates in rural America are 2-3 percentage points higher than in urban areas. States that expanded Medicaid experienced a 7 point increase in insured rates after the passage of the Affordable Care Act.
  • Rural Hospitals Rely On Medicaid. Since 2005, more than 150 rural hospitals have closed, including 20 closures in 2020 alone. Rural hospitals in Medicaid expansion states are 62 percent less likely to close. In 2023, over 600 rural hospitals are at risk of closing in the near future.
  • Rural Hospitals Strengthen Local Economies. Hospitals employ ten percent of total county employment. Rural areas with hospital closures experience economic downturns with a 14 percent reduction in country employment. 673 rural hospitals are at risk of closing, and estimated that if those hospitals shut down, 99,000 health care jobs in rural communities would be lost.

How Medicaid Expansion Helps Rural Americans

Nearly 14 million Medicaid enrollees reside in rural areas. Health care for rural Americans is especially important due to higher prevalence of pre-existing conditions and barriers to accessing health care. The success of Medicaid expansion across the country demonstrates the need for the 10 holdout states to finally adopt expansion. Almost 20 percent of uninsured Americans live in rural areas and would benefit from the long awaited expansion. 

Medicaid Expansion Saves Lives. Medicaid expansion has been proven to increase access to care, improve financial security, and save lives. A study published in the Journal of Health Economics found that Medicaid expansion reduced mortality in people aged 20 to 64 by 3.6 percent. Mortality rates in rural areas are much higher than in urban areas due to a disparity in health care access and increased prevalence of fatal diseases, suicide, and overdoses. 

Medicaid Expansion Reduces Income Inequality And Medical Debt. Medicaid expansion reduces poverty and income inequality across the board by helping low income families access care without jeopardizing income that they may use for other basic living expenses. A 2019 Health Affairs study found that Medicare, Medicaid, and premium subsidies account for one-third of poverty reduction in households without a disability recipient. Medicaid has also been shown to reduce the prevalence of medical debt with nearly 80 percent of the counties with the highest medical debt being from states that haven’t yet expanded Medicaid. 

Medicaid Expansion Plays A Central Role In Fighting The Opioid Crisis. Rural America largely lacks the ability to treat substance use disorders with 65 percent of rural counties lacking the ability to prescribe buprenorphine, an effective drug used to treat opioid dependency. Starting in 2020, Medicaid began covering all medications, therapies, and counseling services that are approved by the Food and Drug Administration to treat opioid use disorders. Medicaid covers an estimated four in ten people with an opioid use disorder. Medicaid expansion in the remaining 10 states is a necessary foundation to help low-income, rural families dealing with higher rates of substance use disorders. 

Medicaid Expansion Is A Lifeline For Rural Hospitals

In states that haven’t expanded Medicaid, rural hospitals are drowning under financial pressure. Low occupancy rates, high levels of uncompensated care, competition with other hospitals, and struggling local economies create a financial burden that rural hospitals face all over the country. Since 2010, 138 rural hospitals have closed, including 20 closures in 2020 alone. One in four rural hospitals face closure without more federal funding in 2022. 

Medicaid Helps Rural Hospitals Stay Open. Rural hospitals in Medicaid expansion states are 62 percent less likely to close. The two most common types of supplemental Medicaid payments are disproportionate share hospital payments, that pay hospitals for uncompensated care for Medicaid and uninsured patients, and upper limit payments, which supplement the gap between fee-for-service Medicaid base payments and the amount that Medicare covers. Some states are also testing the use of global hospital budgets to increase care and improve health outcomes in rural hospitals.

Closure Of Specialized Care And Obstetrical Services. Some hospitals opt to close specific services or facilities that cause patients in rural areas to have to travel further for specialized care. On average, when a rural hospital closes patients have to travel over 20 miles further to access inpatient or emergency care. A 2021 study found that fewer than half of all rural counties in the United States had hospital-based obstetric care. When hospitals face financial hardship, obstetric services are among the first to be cut. Black and Native American women in rural areas are particularly at risk. Black and Native American women are two to three times more likely to die from pregnancy-related causes than white women.

Medicaid Expansion Boosts State Budgets. Medicaid expansion generates enough savings that it is well worth the initial cost, eventually helping boost states budgets. Expansion allows states to access federally matched funds for some people covered by traditional Medicaid. The American Rescue Plan (ARP) provides states with additional funding from the federal government. From 2022 to 2025, the states that haven’t yet expanded Medicaid would gain $90 billion in federal matching funds in addition to $17.6 billion in ARP bonus payments and $6.6 billion from higher state and local tax revenue.

Rural Hospitals Are Large Employers In Their Communities. For rural areas that often have high unemployment rates, hospitals contribute significantly to local economies by employing large numbers of people with relatively high-paying jobs.

Beyond just being a source of jobs, hospitals tend to pay higher wages than other rural industries. As the House of Representatives Minority Staff report on rural hospitals highlights, “The average pay of hospital employees in rural counties is 43 percent higher than the average pay of other workers in the same counties.” As Mark Holmes, the director of the Rural Health Research Program at the University of North Carolina, emphasizes, hospital closures in rural communities can be like losing a factory: “Losing an employer of 150 people with good jobs is like losing a manufacturing plant…Hospitals are usually the largest, or the second-largest, employer in a community. That’s something that’s easy to lose sight of because we think of this from a health standpoint. But the effects are wide-ranging when a hospital closes.”

Rural Hospitals Boost Local Economies. Besides hospitals providing higher paying jobs in the health care sector, rural hospitals also stimulate the local economies of other industries. Hospitals purchase goods or services from local private businesses which helps stabilize and reinforces the local economy. In turn, strong private sector employment allows for more tax dollars for public goods, such as education and safety services.