With Impending Funding Crises, Rural Hospitals Need a Medicaid Expansion Lifeboat to Stay Afloat

Two hundred rural hospitals are at immediate risk of closing, and another 600 rural facilities are at high risk of closing in the future. The end of emergency COVID-19 hospital funding, together with other looming threats, represents a major potential rural hospital crisis. Rural hospitals in states that have expanded Medicaid coverage have more sustainable median operating margins (1.6%) compared with rural hospitals in non-expansion states (-0.3%). Uncompensated care, or services performed by hospitals or health care providers that are not reimbursed by some type of health insurance, is a primary reason for hospitals having worse operating margins and moving toward closure. Since 2010, uncompensated care has increased by 50% at rural hospitals, disproportionately driven by Medicaid non-expansion states. Any states that have not expanded Medicaid can expect a wave of rural hospital closures in 2023.

Rural hospitals are essential to the health and economic well-being of rural communities. However, they are a dying breed among health care facilities. Since 2010, at least 134 rural hospitals have closed across the United States, with several hundred more vulnerable to closing in the future. The people from the rural communities surrounding these closed hospitals have to drive substantially farther for care or to deliver newborns and are left without emergency departments. These alarming closure rates are preventable disasters that have been years in the making. Rural hospital closures have led to crumbling health care systems and diminished health for the surrounding communities. After a reprieve during the first couple years of the pandemic, record rural hospital closures may pick up again in 2023 as three funding crises emerge:

1. COVID-19 funding for rural hospitals has ended.
2. Uncompensated care costs will increase when the public health emergency ends.
3. Possible economic recession could accelerate rural hospital closures even further.

A new era of rural hospital closures is coming. Medicaid expansion is a critical, proven solution to salvaging rural health care systems that states cannot afford to pass up.