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Hundreds of rural hospitals already at risk of closing as ACA repeal looms, increasing their vulnerability

Medicaid expansion was a boon for rural hospitals, as millions more Americans gained coverage and were able to pay for care.

Jeff Lagasse, Associate Editor

Even if the Affordable Care Act were to remain intact, upwards of 670 rural hospitals across the country are at risk of shutting their doors, according to findings from iVantage Health Analytics. But with the federal health law threatened by Republican majorities in Congress, thin margins will likely turn into losses.

What has benefitted rural hospitals the most, iVantage found, was the expansion of Medicaid. While not adopted nationally, 31 states, plus the District of Columbia, expanded their Medicaid offerings through a federal funding formula that increased coverage to 9 million more Americans.

Rural hospitals in expansion states, running on extremely tight margins, saw a significant improvement to their bottom lines, and provided a benefit to the estimated 62 million Americans living in rural areas, many of whom received health coverage under the ACA for the first time.

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Rural hospitals face several distinct disadvantages. Many are not part of larger health systems, which gives them decreased leverage when dealing with insurance companies; they also don't have as much capital to invest in amenities such as facilities and electronic health records.

"The ACA had an impact on rural America," said Michael Topchik, national leader of the Chartis Center for Rural Health and member of the iVantage leadership team. "Obviously in very red states like West Virginia, Iowa, Kentucky, Louisiana -- places that broke Trump's way -- those states saw a lot of people gain coverage either directly through Medicaid expansion or secondarily through the exchanges. … There's a statistically significant impact on the rural median operating margins in states that expanded Medicaid."

iVantage examined rural hospital performance across a variety of measures, and estimated that loss of Medicaid expansion would contribute to 137,000 fewer jobs in the broader community, with 99,000 of those jobs lost in the healthcare sector.

The ACA used only federal funds from 2014 through 2016 to pay for the expanded benefits, and while that reduces to 90 percent by 2020, it's more than the 50- to 75-percent match that existed before ACA implementation. Preliminary replacement plans from the GOP-led House would eliminate Medicaid expansion by 2020.

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"It will be ironic that the very people who broke for this administration the most, they and their fellow community members may ultimately pay a disproportionately higher price with respect to the repeal," said Topchik. "What we don't know is what the replace is going to be. And that's perhaps where I have some optimism."

Topchik pointed to several Republican healthcare proposals in the past that would have sought to preserve the financial viability of rural hospitals. While those past bills have not yet been revisited post-election, they provide a framework that Topchik said lawmakers may want to keep in mind as they head toward a more finalized proposal.

"Rural margins are reflections of a lot of different moving pieces," said Topchik. "What we can say emphatically is they are deteriorating. The ACA had a mitigating impact. It appeared to float the safety net, to strengthen it."

Twitter: @JELagasse

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