Sequestration, Medicaid and Mortality

Medicare cuts from sequestration will cost rural communities 12,000 healthcare jobs. But even bigger problems await rural residents in states that don’t expand Medicaid under the Affordable Care Act.

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Much has been reported in recent weeks about the impact of sequestration, the automatic federal spending cuts. The Los Angeles Times states that as the Obama Administration implements the mandated sequester, health care will take a huge hit, second only to defense.

This disproportionate impact will affect areas of the health care system “already hobbled by years of retrenchment or underfunding.”

Sequestration will push 63 rural hospitals from profitable to unprofitable operating margins while the overall average rural hospital operating margin is already -5.68 (unfortunately, that’s a minus). It is estimated that due to sequestration more than 12,000 rural health jobs will be lost nationwide. (See this report on the impact of Medicare sequestion on rural communities.)

As National Rural Health Association past-president Tim Size, of the Rural Wisconsin Health Cooperative, points out in his blog, in rural, we’ve been here before. Rural providers have survived decades of change and, just like spring follows winter, we will again. 

While the swirl of sequestration captures national attention, states have been deciding whether or not they will expand Medicaid programs to cover additional people per the Affordable Care Act. For states that don’t choose expansion, providers will not only be assigned a 2 percent automatic cut in 2014, but will also not benefit from the additional customers who would have been able to use Medicaid to pay for the services they’ve received. 

On a recent trip to Oklahoma, a state where Medicaid will not be expanded, I learned more compelling reasons for expansion. In Oklahoma, if Medicaid was expanded, for the period between 2014 and 2020, the state would see an addition of 23,500 new jobs, generating earnings of $3.9 billion and netting Oklahoma more than $522 million in new state tax revenue. The real kicker is that during this period approximately 261,000 additional adults and children would be covered with insurance. All totaled the net financial gain for Oklahoma would be $376.7 million. Not a bad deal, no matter how you look at it. I’m confident the impact would be similar in other states as well. 

NY Times
This New York Times graphic shows that in late February, 22 states planned to expand Medicaid as part of the Affordable Care Act. Seventeen won’t expand. The rest were undecided.

Evidence abounds that Medicaid saves lives. A Harvard School of Public Health study found “that expanding Medicaid to low-income adults leads to widespread gains in coverage, access to care, and,   most importantly, improved health and reduced mortality.”

Speaking of mortality, a recent University of Wisconsin-Madison study discovered that “women in parts of rural America face worsening mortality rates.” Take a look at the interactive maps in this study and see where your county rates. 

Since rural areas have a disproportionate share of elderly and poor people, Medicaid expansion would have a more significant impact in saving lives and improving economic conditions for rural. I find myself agreeing with Arizona’s Gov. Jan Brewer who said “agreeing to expand Medicaid means protecting rural hospitals from growing costs in caring for the uninsured.”

Who would think that sequestration, Medicaid and mortality have something in common? I now know that 62 million rural Americans would think so.

Brock Slabach is senior vice president of the National Rural Health Association.

 

 

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