On Wednesday, residents of Belhaven, North Carolina got a taste of how stubborn GOP opposition to the Affordable Care Act can affect them personally when executives at Vidant Health System unanimously voted to shut down the local Vidant Pungo Hospital within six months. Vidant officials said the move was necessary as a consequence of North Carolina’s refusal to participate in Obamacare’s optional Medicaid expansion.
Belhaven is a small town of 1,688 where more than 55 percent of the population is African-American and approximately 28 percent of residents live in poverty. Vidant Pungo bills itself as “a private, not-for-profit 49-bed acute care hospital on the waterfront in Belhaven” that “provides medical care to patients in eastern Beaufort and Hyde counties, serving approximately 25,000 people with a service area of approximately 1,260 square miles.” In those counties, more than 19 percent and 25 percent of residents respectively live below the poverty level, according to the latest census data.
Since safety-net hospitals that serve regions with high numbers of poor and uninsured people often have patients who can’t afford to pay for their care, they usually have to rely on the government to pick up some of the tab for uncompensated medical treatment to stay financially viable. But Obamacare reduced reimbursements to these so-called “disproportionate share hospitals” (DSHs) — one of which is Vidant Pungo — since the law originally intended all states to expand Medicaid for every American living up to 133 percent of the Federal Poverty Level. If things had unfolded that way, these hospitals wouldn’t need the additional government payments since their patients would finally be able to pay for their own care through Medicaid.
But the Supreme Court ruled the expansion to be optional last summer. That’s why hospitals have intensely lobbied state officials to expand Medicaid, since the combination of uninsured patients and reduced federal reimbursements could spell financial doom for them. Unfortunately, at least 21 states with GOP governors or legislatures — including North Carolina — opposed to the health law have refused generous federal funding to expand Medicaid eligibility.
The federal government took steps in May to soften the blow to DSHs by tying how much states’ reimbursements for uncompensated care will be cut with their uninsurance rates — i.e., the larger uninsured population a state has, the less its DSH funding will be cut. But this is merely a fiscal band-aid, not a permanent solution. And as Vidant Pungo’s imminent shuttering demonstrates, some hospitals simply aren’t willing to risk the uncertainty.
Expanding Medicaid would cut North Carolina’s uninsurance rate by more than 48 percent.