Study Claims Medicaid Changes Could Lead to Hospital Closures

Researchers are cautioning that undoing Medicaid expansions (which occurred under the ACA) may lead to hospital closures. Decreased Medicaid revenue would be to blame, according to the report published in Health Affairs.

The investigators examined data from the Centers for Medicare & Medicaid Services on hospital closures and financial performance between 2008 and 2016. Closure rates were stable between 2010 and 2012 among states that moved to expand Medicaid coverage, compared with states that opted not to expand.

In 2013, after the Supreme Court ruled that states had the option to expand Medicaid to cover all adults earning up to 138 percent of the federal poverty level, closure rates began to diverge. The hospital closure rate among non-expansion states was 0.45 per 100 hospitals in 2012 and jumped to 0.90 per 100 hospitals. Also, between 2008 and 2016, non-expansion states had a total increase of 0.43 closures per 100 hospitals, while expansion states’ closure rates decreased by 0.33 per 100 hospitals. In states with expanded coverage, hospitals were 84 percent less likely to close, according to the report.

Certain hospitals are at an increased disadvantage: Hospitals in urban areas (with an uninsured patient rate of at least 30% prior to ACA implementation) were 92 percent less likely to close after Medicaid expansion, and rural hospitals serving the same proportion of uninsured patients were 91 percent less likely to close after expansion. The National Rural Health Association reports that since 2010, more than 80 rural hospitals have closed and more than 670 are at financial risk of closing.

Sources: Lindrooth RC, Perraillon MC, Hardy RY, et al. Understanding the relationship between Medicaid expansions and hospital closures. Health Aff. 2018;37:111-20; Modern Healthcare, January 8, 2018.