Rural hospitals in states that expanded Medicaid are 60 percent less likely to close
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by LeAnn R. Ralph
MENOMONIE — With 10 years of data available, statistics show that hospitals serving rural areas, such as Sacred Heart Hospital and St. Joseph’s Hospital, are 60 percent less likely to close in states that have implemented Medicaid expansion.
Dr. Alexandra Hall, a member of the Dunn County Health and Human Services Board, presented a report on Medicaid expansion at the July 25 meeting.
The Hospital Sisters Health System announced in late January that Sacred Heart Hospital in Eau Claire, St. Joseph’s Hospital in Chippewa Falls, and 19 Prevea Clinics in the Chippewa Valley would be closing within two to three months.
When Medicaid expansion proposed by the federal government went into effect in 2014, which increased the income eligibility for people to qualify for Medicaid, 28 states and the District of Columbia accepted and expanded their Medicaid programs.
The Wisconsin Legislature, under Republican control in the state Assembly and the state Senate, and with Republican Governor Scott Walker, were among the 22 states that refused to accept the Medicaid expansion money.
In 2024, 40 states plus Washington, D.C., have adopted the expansion. South Dakota and North Carolina were the most recent additions in 2023.
Wisconsin is still among the 10 states that have not accepted the expanded Medicaid funding.
The major coverage provisions of the Affordable Care Act went into effect in 2014 as well, and states that accepted the Medicaid expansion saw a much larger decrease in the number of uninsured residents.
Governor Walker said he refused the expanded Medicaid funds from the federal government because the money would “go away” after while, and the taxpayers of the state could not afford to pay for the expanded Medicaid coverage.
Dunn County
According to Dr. Hall’s report to the Health and Human Services Board, about 1,000 residents in Dunn County would qualify for Medicaid coverage under the expanded program.
Federal funding would offset most of the cost of expanding Medicaid to people earning up to 138 percent of the federal poverty level, which would be an annual income of $17,774 for a household size of one or $36,570 for a household size of four.
Someone earning $17,774 per year would be making $8.54 per hour for a full-time job.
If there were two income earners in a household of four earning $36,570 per year, that would amount to a full-time wage of $17.60 per hour for one person or $8.80 per hour if two people were working full time.
Expanding Medicaid in Wisconsin would improve the health of the people who qualify, would improve the local economy, would save the state money and would help rural hospitals to stay open, Dr. Hall said.
The reason that an expanded Medicaid program that made healthcare available to more people would help the local economy is that people would have improved health and would be able to work more hours, she said.
Many states have accepted the Medicaid expansion for many years, so there is now a lot of data from which to draw conclusions, Dr. Hall said.
In states where Medicaid expansion has been implemented, the average medical debt for people who qualify has decreased by $1,400, she said.
If people have health insurance, they go to the doctor sooner when they have a health concern, so the outcomes are better than if people wait until they are so sick that the situation is dire, Dr. Hall said.
Since the federal government pays a larger portion for Medicaid, for many states, it has been cost neutral, she said.
Hospital revenue
The last year before Sacred Heart closed, the hospital lost $61 million, Dr. Hall said.
Not all of the money that was lost was due to uncompensated care, but it is certainly a piece that contributed to the amount of money lost, she said.
Hospitals have an operating margin of about 0.2 percent, so if there is uncompensated care of $1 million to $2 million, that makes a difference, Dr. Hall said.
The goal for producing the report was to help people make informed decisions, she said.
“I have been beating this drum for a long time,” said Gary Stene, county board supervisor from Colfax and a member of the Health and Human Services Board.
The report takes out any partisan aspects and gives the impacts in dollars and cents, he said.
Most of the Republican legislators on the state level who were opposed to the Medicaid expansion were opposed for partisan reasons, Stene said, adding that most of the Republicans he knows do have an interest in how money is spent.
The Health and Human Services Board plans to consider a resolution supporting Medicaid expansion, which would then be forwarded to the Dunn County Board’s Executive Committee.. After the Executive Committee, the resolution would be forwarded to the Dunn County Board for consideration..
Other info
Here is some of the information available in the report on Medicaid expansion in Dunn County:
• There are 17,300 households in Dunn County, and 21 percent of those households, or 3,689, earn less than $30,000 per year.
• The median household income in Dunn County was $69,721 in 2022, which compares to a median household income of $64,420 for 2021. (Median means that half of the households are above that amount and half are below.)
•.In Dunn County, 16 percent of the households earn between $75,000 and $100,000 per year; 10 percent earn $100,000 per year; about 8 percent earn $125,000 per year; about 8 percent earn $150,000 per year; and about 6 percent earn more than $150,000 per year. Approximately 48 percent of the households earn more than $75,000 per year.
• In Dunn County, about 5 percent of the households earn less than $10,000 per year (approximately 850 households); about 5 percent of the households earn between $10,000 and $15,000 per year; about 5 percent earn between $15,000 and $20,000 per year; about 5 percent earn $20,000 to $25,000 per year; about 4 percent earn $25,000 to $30,000 per year; about 4 percent earn $30,000 to $35,000 per year; about 4 percent earn $35,000 to $40,000 per year; about 4 percent earn $40,000 to $45,000 per year; about 4 percent earn $45,000 to $50,000 per year; about 8 percent earn $50,000 to $60,000 per year; and about 10 percent earn $60,000 to $75,000 per year. About 16 percent of the households earn between $30,000 and $50,000 per year.
• Traditional Medicaid funding costs 61 percent for the federal share and 39 percent for the state share.
• Medicaid expansion funding costs 90 percent for the federal share and 10 percent for the state share.
• States that have expanded Medicaid have found increased participation in preventative health (such as mammograms); improved treatment for mental health conditions (such as depression); decreased opioid overdose deaths; decreased deaths from cancer; decreased deaths in pregnancy and infancy; improved overall sense of health.
• Medicaid expansion also is associated with reduced risk of loss of income because of an inability to work due to illness; improved ability to seek and obtain employment; decreased medical and overall debt; fewer evictions; reduced financial strain; better credit scores so there is more of an ability to obtain loans for cars or mortgages.
• The benefits to communities include improved workforce participation (helps address workforce shortages; helps broaden tax base); improved local economies because there are more financially stable individuals who are able to participate more in the local economy; a reduced need for support services, such as crisis services, economic support and law enforcement.
• The benefits for hospitals and clinics includes reductions in uncompensated care. If people do not have health insurance or are underinsured, then hospitals do not get paid for the care they provide. Most hospitals cannot control which patients they accept because of insurance coverage. Most hospitals are non-profit. And hospitals and clinics in rural areas have exceptionally low operating margins, which puts them at a high risk of financial instability.
• About half of the non-profit hospitals had a negative operating margin in 2022, with margins ranging from a high of 27 percent to a low of -21.5 percent. The median operating margin is 0.2 percent.
• In 2022, St. Joseph’s hospital had a net revenue of -$6.23 million; Sacred Heart had a net revenue of -$61.7 million; and Marshfield had a net revenue of -$44.3 million.
•. In 2022, Oakleaf Surgical had a net revenue of $37.2 million; Western Wisconsin Heath had a net revenue of $2.97 million; Mayo Clinic HS – Northland (Barron) had a net revenue of $10.7 million; Mayo Clinic HS – Chippewa (Bloomer) had a net revenue of $2.07 million; Mayo Clinic HS – Eau Claire had a net revenue of $186,419; Mayo Clinic HS – Red Cedar (Menomonie) had a net revenue of $24.14 million.
• The majority of rural hospital closures, 74 percent, were in states where Medicaid expansion was not in place.
• Since 2010, there have been 82 rural hospitals that have completely closed across the county, and most of those were in non-expansion states like Wisconsin.
• Data for 2010-2019 shows that a rural hospital is 62 percent less likely to close if the hospital is located in a state that accepted Medicaid expansion. When rural hospitals close, a critical source of health care — and employment — disappears in rural communities.
• Most low income people do qualify for federal subsidies to pay for Affordable Care Act health insurance plans at no cost to them, but — while primary care is covered, emergency room visits, lab tests and x-rays are usually covered at 75 percent, and many prescriptions are not covered, even on a Silver plan. An emergency room visit, some diagnostic tests or several months of a prescription can cost the out-of-pocket maximum of $1,600 to $1,800, which is not affordable for someone bringing home $2,200 per month who is working a $15 per hour full-time job.
• Many states that have expanded Medicaid have found it to be budget neutral because there is a decreased need for crisis services, an improved workforce participation rate and decreased medical debt, fewer evictions and less of a need for other support services from the county.
• Federal taxes are income based while county taxes are property based, so shifting more of the expenses to the federal government helps farmers and retirees who are living on a fixed income.
