Medicaid cuts would push rural hospitals into difficulty “on the edge”: report

Diving brief:

• Medicaid cuts considered in the congress could already push rural hospitals in difficulty in the red, according to an analysis of the Chartis Center for Rural Health.
• If the security program income was reduced by 15%, rural hospitals would lose more than $ 1.8 billion, according to the health consulting firm. This figure reaches more than $ 2.4 billion if Medicaid revenues are reduced by 20%.
• The obstetrics would be hardly affected by the Medicaid cuts, according to Chartis. Almost 50% of rural births are currently covered by the program and the cuts could cultivate deserts of obstetric care.

Insight

Legislators are targeting Medicaid reductions and other programs to finance the tax reductions of President Donald Trump and brake what they say to be “waste, fraud and abuse” in the federal government.

The Chamber narrowly adopted its bill of reconciliation at the end of May, which called for significant reductions in Medicaid and forced the beneficiaries to Meet the work requirements to maintain the coverage. It has also increased the frequency of eligibility controls.

Last week, the Senate Republicans published their own version of the Reconciliation Bill, which included even deeper cuts in Medicaid. The bill expands work requirements and requires more restrictions on service providers. The legislators will debate changes in the bill in the coming weeks, in order to bring the bill to the Trump office by July 4.

Medicaid cuts could harm rural hospitals, many of which are based more on the income of the security program, according to Chartis, which analyzed data from the costs of more than 2,000 facilities.

Rural hospitals are already in trouble: almost 50% of rural hospitals operate at a loss, with more than 400 vulnerable to closure. Endowment shortages, consolidation of hospitals and the unfavorable mixture and reimbursement of payers have reached the results of rural hospitals in recent years and have contributed to an increase in closures.

According to Chartis, Medicaid’s revenues provide $ 3.9 million to the results of rural hospitals, or approximately 9% of the total net revenues of hospitals, according to Chartis. In some states, Medicaid provides an even higher median amount of income: for rural hospitals in Louisiana, New Mexico, Kentucky, Alaska, Arizona and Washington, Medicaid represents more than 15% of total net revenues.

The reduction of these funds could have a significant impact on rural hospitals, especially since the median operating margin of the rural hospital is less than 1%, according to Chartis.

The decrease in Medicaid funds could force rural hospitals to close. It could also have an impact on access to obstetrics, already at risk in rural communities.

Medicaid only reimburses 50% of what private insurers pay for care related to childbirth, and obstetrics is also among the most expensive services for hospitals, according to the report. The disparity has decreased access to rural obstetrics. Nearly 300 rural hospitals have ceased to offer obstetrics between 2011 and 2023.

“Without local access to the OB, the expectations of mothers must travel greater distances for prenatal care, labor and delivery – invariably increasing the risk for mother and baby,” said the report. “Access to prenatal care and postnatals contribute to this crisis, and Medicaid reductions would probably intensify financial pressures on services such as OB and further restrict access.”