Although financial stability in rural hospitals has been a relatively long-standing national problem, in the last decade, hospital closures and the incidence of highly distressed hospitals in rural areas have disproportionately impacted certain states. States that have not expanded their Medicaid programs under the Affordable Care Act, which implemented a program to extend additional federal support to cover adults living below 138% of the federal poverty line (referred to herein as “Medicaid Expansion”), are bearing the brunt of this crisis. Although the reason for hospital closures is multi-faceted and complex, health policy experts have consistently identified the lack of Medicaid Expansion as a key driver for hospital closures and consider future adoption of expansion as an imperative. To that end, there have been several initiatives within the last year to promote and incentivize the remaining twelve states that have not expanded their Medicaid programs to do so. Thus far, no states have opted for expansion based on these incentives—although Medicaid Expansion remains an option. Several other bills have been proposed in Congress to close the so-called “coverage gap,” which range from a federal public option for those in the gap to additional state incentives. This Article will argue that current federal initiatives attempting to incentivize states to expand Medicaid, while well-intentioned, are politically challenging and unlikely to be successful with the present state leadership. Regardless, the adoption of Medicaid Expansion will remain a key component to maintaining stability in rural health markets and continued federal efforts to narrow the coverage gap should continue.
This Article will explore both current and proposed legal approaches aimed at closing the Medicaid coverage gap to determine whether such efforts will be successful in creating greater financial stability for rural health care providers and the communities they serve. In Part II, it will examine the existing research and literature regarding rural hospital closures since 2010 and how a state’s decision to adopt Medicaid Expansion impacts closures and economic stability for the entire community. It will further outline the efforts to incentivize Medicaid Expansion through the American Rescue Plan of 2021, and survey other proposals at federal and state levels aimed at creating greater sustainability for hospital providers in rural markets. In Part III, the Article will compare rural hospitals in expansion states to those in non-expansion states to ascertain whether the expectations for Medicaid Expansion will meet reality. This Part will also analyze the legislative climate in those states that have yet to expand their Medicaid coverage for purposes of understanding the likelihood of success in current efforts. In Part IV, this Article will argue that current incentive-based efforts to close the Medicaid coverage gap in the twelve remaining states that have not yet adopted Medicaid Expansion are unlikely to be successful due to political barriers in those states, both actual and perceived. It will further argue that narrowing or closing the coverage gap nevertheless remains a vital aspect of stabilizing health access and resources in rural communities and that federal efforts to continue to narrow or close that gap should continue. Even if these efforts will not save all hospitals, increasing health access through other forms of providers such as emergency-only services will still require a largely insured population for long-term stability. Part V will then conclude by offering a few suggestions regarding where federal regulators and legislators should focus their efforts to stem the tide of rural hospital closure and instability and further endeavor to suggest ways in which current proposed bills might better target specific issues that will bolster the health care infrastructure of rural communities. This issue needs to be addressed with great urgency to prevent further gaps in the urban-rural health care divide.
Farringer, Deborah, "Medicaid Expansion Expectations" (2022). Law Faculty Scholarship. 145.