OCPA column: Medicaid expansion no cure for rural health

Medicaid expansion no cure for rural health

By Jonathan Small

Those urging Oklahomans to expand Medicaid to provide taxpayer-funded insurance to able-bodied adults, at a state cost of up to $374 million annually, are touting it as a cure for rural health care challenges. But one look at what has happened in Medicaid-expansion states shows that claim is bogus.

In 2015, Moody’s Investor Services examined the effect of Medicaid expansion on hospitals. While hospitals in expansion states saw a decline in unpaid bills (called “bad debt”), the report’s author, Senior Analyst Daniel Steingart, nonetheless concluded that “big drops in bad debt do not necessarily lead to big improvements in operating performance.”

In other words, struggling hospitals continued to struggle.

In fact, the report noted financial performance in the hospital sector had improved nationwide and hospitals in Medicaid expansion states did not outperform hospitals in non-expansion states.

In Colorado, a state board reviewed the impact of Medicaid expansion and found, despite rising profits, state hospitals still increased prices. And when new hospitals were built, they were not built in underserved rural areas.

“New construction seems to correspond to the regions that do not need new facilities nor new hospitals, with new hospital construction concentrated largely in the higher income areas of Colorado, such as Longmont/Boulder,” the report stated.

Kentucky expanded its Medicaid program in 2014. In 2016, when Kentucky officials applied for a federal waiver to relax some associated mandates, they reported that nearly one-third of Kentucky residents were on the welfare program. Yet “the expansion has yet to impact the health status of Kentuckians.” While a study commissioned prior to Medicaid expansion claimed expansion would aid the state’s economy, in 2016 officials reported, “The reality is that Medicaid expansion does not pay for itself as envisioned by the prior administration …”

If you dismiss the experience of other states, consider what has happened in Oklahoma over the last two decades. From 1998 to 2018, enrollment in the traditional Medicaid program increased 126 percent, rising from 437,000 people to more than 1 million. The state cost of Oklahoma’s Medicaid program increased from $536 million to $2.3 billion, and billions more in federal funding also went to state hospitals.

Put simply, even without adding able-bodied adults, Oklahoma has already expanded its Medicaid program dramatically. If increased Medicaid spending translates into more rural hospitals, we should be seeing the results by now. Instead, rural hospitals are closing.

Those who want to expand Medicaid even more, in the name of “saving” rural health care, are doubling down a strategy that has been tried and failed. There are ways to address rural Oklahoma’s health care needs. Medicaid expansion is not one of them.

Jonathan Small serves as president of the Oklahoma Council of Public Affairs.