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[MM Curator Summary]: Turns out the Aace in the hole used by far left-wing activists to force Medicaid expansion is really a Joker.
But it has disastrous consequences for state budgets and fosters high levels of dependency.
Democrats think they’ve found the key to convincing Republican states to expand Medicaid and cover millions more able-bodied adults in the government-run health-insurance program. Over the past few years, Democrats have claimed that refusing to accept ObamaCare’s central policy will force the closure of rural hospitals, hurting GOP states and voters the most. This tug-at-the-heartstrings message has swayed Republican-dominated states such as South Dakota, Missouri and, as of late March, North Carolina to expand Medicaid. But it’s a lie.
I have analyzed every hospital closure since 2014 when ObamaCare went into effect. Medicaid expansion has failed to halt rural hospital closures, and in some cases it contributes to them. The reason is simple: Medicaid is so poorly run that it often adds financial burdens to hospitals. The 10 Republican-led states that haven’t adopted this policy would be wise to hold their ground, given that Medicaid expansion also has disastrous consequences for state budgets and fosters historic levels of government dependency.
Here are the facts. Since 2014, dozens of hospitals have closed in states that haven’t expanded Medicaid. Yet their stated reasons almost always have nothing to do with Medicaid expansion. Damage from natural disasters, declining business and fraud, among many other factors, have caused hospitals to close. Only four hospitals in nonexpansion states directly attributed their closures to a lack of Medicaid expansion. Two of them later were alleged to have engaged in wide-scale fraud and financial mismanagement, casting doubt on their earlier statements.
Even more telling is what happened in the nearly 40 states that did expand Medicaid before the start of this year. Despite the assurances of liberal activists, nearly 50 hospitals have closed in these states since expansion passed, including more than a dozen in rural areas. Missouri voted to expand Medicaid by ballot initiative in August 2020, with implementation beginning a little more than a year later. Yet two rural hospitals closed in September 2022, well after expansion took effect.
The situation will surely worsen. According to data from the Center for Healthcare Quality and Payment Reform, 1 in 4 rural hospitals in expansion states are still at risk of closure. A 2019 Navigant study found that the top five states at risk of losing community-essential rural hospitals are all expansion states.
This is exactly what Medicaid expansion was supposed to prevent, yet expansion itself is driving this crisis in rural and urban hospitals alike. The program’s reimbursement rates are about 60% of what private health insurance pays, often leaving hospitals with large losses on Medicaid patients. Nationwide, more than 18 million able-bodied adults and counting have enrolled in the program due to expansion, and each new recipient potentially adds red ink to a hospital’s balance sheet.
Rural hospitals typically struggle financially as it is, and Medicaid expansion can push them into insolvency. But the problem isn’t limited to rural hospitals. Pennsylvania expanded Medicaid in 2015 and Philadelphia’s Hahnemann Hospital closed in 2019 because of what the Philadelphia Inquirer called a “heavy reliance on Medicaid.”
Despite these closures, hospital advocacy groups have joined Democrats in vigorously demanding expansion. The promise of federal money in the short term—and the resulting bonuses and pay bumps for hospital executives—is apparently more important than future stability.
Democrats won’t stop until they convince all 50 states to expand Medicaid. As one activist told the New York Times in March, “this argument about rural hospital closures has been an incredibly compelling argument to voters.” That same story, which focused on Mississippi, was titled “A State’s Choice to Forgo Medicaid Funds Is Killing Hospitals.” Mississippi and Alabama are likely the next two states in Democrats’ sights.
The remaining Republican-led states shouldn’t fall for it. By not expanding Medicaid, they are likely saving rural hospitals from even worse financial pressure, while protecting taxpayers from enormous losses and saving able-bodied adults from government dependence. In these states, at least, the truth about Medicaid expansion still prevails.
Mr. Dublois is data and analytics director at the Foundation for Government Accountability.
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