A rural hospital located in Brownsville, Tennessee is ending its inpatient and emergency services this summer because it can’t afford to keep operating them. Instead, the facility will become an urgent care clinic dealing with minor illnesses. W. Larry Cash, the chief financial officer for the community health group that operates the hospital, told the Tennessean that his state’s refusal to expand Medicaid was a “contributing factor” in the move.
Providers that serve a high number of poor and uninsured Americans, technically called “Disproportionate Share Hospitals,” often operate on a loss because their patients can’t always pay for their care. To compensate, the federal government offers reimbursements for those hospitals — but the Affordable Care Act changes the way the payments are structured. Because the health law intended every state to expand Medicaid, and therefore reduce the number of uninsured people who can’t pay their bills, the reimbursements for DSH hospitals have been reduced.
But if hospitals are located in states that continue to refuse Obamacare’s Medicaid expansion, that puts them in a difficult spot. They’re losing out on some of the federal government’s funding without making up the difference with an influx of insured patients.
This is by no means an unexpected consequence. For years, rural providers have been warning that failing to expand the public health program will put them in jeopardy. Last December, the Tennessee Hospital Association predicted that rural hospitals would be forced to start closing unless the state reversed its decision on Medicaid. The Rural Policy Research Institute sees the fight over this particular Obamacare provision as one of the most important issues facing its constituency.
Nonetheless, GOP-led states have remained steadfast in their opposition to Medicaid expansion. Rural hospitals are beginning to close in states like Georgia, North Carolina, and Virginia. These facilities are often located in areas where poor residents desperately need access to health services.
In the states that have agreed to expand Medicaid, some rural health clinics are closing for an entirely different reason. In Arkansas, where GOP lawmakers struck a deal with the federal government to implement a state-tailored version of the expansion, a free health clinic just closed because so many people now have insurance coverage under Obamacare. “Our services won’t be needed anymore, and this will conclude our mission,” the clinic director explained.