Medicaid Expansion Could Harm Rural Healthcare, States AAPS

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Medicaid expansion is on the November ballot in a number of states that have sizable rural populations, including Nebraska, Idaho, and Utah, as reported in AMA Morning Rounds for Sept 26. One rationale is that the uninsured rate for low-income adults in rural and small towns in expansion states is lower than in non-expansion states (16 percent versus 32 percent).

“Having a Medicaid card, however, does not mean that a person gets more or better medical care,” states AAPS Executive Director Jane M. Orient, M.D. “Nor do these figures tell us whether resources are being taken from disabled persons and children to meet the demand from the influx of childless, able-bodied adults.”

“But there is evidence from Arizona that expanding Medicaid increased the prices of services to both privately insured and uninsured patients, and strained the medical system, especially in rural areas,” she added.

One of the arguments that convinced Arizona lawmakers in 2013 to expand Medicaid was that employers and employees were paying a “hidden healthcare tax,” she explained. When hospitals treat the uninsured, they are said to pass along the unpaid treatment costs to private payers, leaving employers and employees with higher health insurance premiums.

But according to a study by the Goldwater Institute, Arizona’s Medicaid expansion actually made the “tax” worse. Before Medicaid was expanded, proponents claimed that the cost shifting to private payers amounted to 14% more than hospitals’ costs in 2007. But in 2016, private payers paid 27% more than hospital costs. Urban hospitals were able to increase charges on private payers dramatically, reaping disproportionate financial benefits at the expense of their rural counterparts.

While emergency department visits by uninsured patients decreased, visits by Medicaid enrollees increased substantially, and charges tripled. Urban hospital charges increased at twice the rate of rural hospitals.

“The primary beneficiaries of Arizona’s Medicaid expansion are not the people, but the politically connected hospitals,” the Goldwater Institute concluded. “The experience and track record of Arizona should serve as a cautionary tale to states considering expansion.”

The Association of American Physicians and Surgeons (AAPS) is a national organization representing physicians in all specialties, founded in 1943.

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