October 21, 2015

Obamacare Crushing Rural Hospitals

  • Obamacare has been a major factor causing rural hospitals to shut down.

  • Last week a hospital in Kansas became the 56th rural hospital to close since 2010.

  • Across America, another 283 rural hospitals are on the brink of closure.

Last week Mercy Hospital – a 75-bed rural hospital in Independence, Kansas – was forced to close. The hospital was the center of care in Independence for a century. It was also a centerpiece of the local economy, providing nearly 200 jobs.

Rural Hospitals Are Closing in Record Numbers

Mercy Hospital will be the 56th rural hospital in the United States to close since 2010. An additional 283 rural hospitals are in danger, according to iVantage Health Analytics.

Map of rural hospitals closing nationwide under Obamacare

More rural hospitals have closed since the start of 2013 than in the previous 10 years. Thirty-five percent of rural hospitals are operating at a financial loss, and 69 percent have a negative operating margin.

Obamacare Is a Big Part of the Problem

There are several factors contributing to the decline of rural hospitals, but the main culprit since 2010 has been Obamacare. The president’s health care law made cuts to Medicare providers, reduced federal payments to hospitals for the uninsured, caused massive increases in deductibles that discourage patients from seeking care, and mandated a host of new regulations.

Medicare Cuts

Though the administration claimed Obamacare’s Medicare cuts would be used to extend the life of the Medicare trust fund, they were actually used to pay for Obamacare’s massive new entitlements. Despite the billions of dollars Obamacare spent to try to boost health insurance enrollment, the administration continues to fall short of its coverage goals. For hundreds of rural hospitals, the Medicare cuts make it difficult to stay afloat.

DSH Payment Reductions

Obamacare reduced federal payments for the uninsured, known as Disproportionate Share Hospital payments. This money goes to hospitals with a disproportionate share of uninsured patients. Obamacare reduced these payments with the expectation that they would be less necessary once more people had insurance, especially through Medicaid expansion. The expansion has not happened like the administration expected, but the DSH payments were still cut. Many states could not bear to put more of their residents in a Medicaid program that already struggled to care for their communities’ sickest and poorest people. Other states could not have afforded to expand even if they wanted to – Medicaid expansion requires states to cover part of the bill starting in 2017, which is an enormous challenge for cash-strapped states. By taking away these hospitals’ DSH payments, Obamacare dealt another financial blow to small hospitals across the country.

Increased Deductibles

Obamacare has led to significantly higher health insurance deductibles. Over the last five years, average deductibles on plans provided through employers have risen almost seven times as fast as wages. Employers are preparing for the “Cadillac Tax,” the 40 percent tax on high-value insurance coverage some employers offer, which takes effect in 2018. In anticipation of this huge tax increase, employers have already begun to rely on more employee cost-sharing, such as higher deductibles. As a result, many patients can’t afford the out-of-pocket costs and choose not to seek the care they need. Smaller hospitals with fewer patients feel these changes first.

Every Second Counts

Even without the burdens of Obamacare, people living in rural areas face challenges when trying to access health care services. Seventy-seven percent of rural counties in the United States are classified as having a shortage of primary health professionals. Nine percent of rural counties have no physicians at all. According to the National Organization of State Offices of Rural Health, about 60 percent of trauma deaths in the U.S. occur in rural areas, even though only 20 percent of Americans live in rural areas. After a traumatic injury, access to an emergency room within one hour can be the difference between life and death. Each new closure under Obamacare hurts a new community somewhere in America, making it more difficult for patients to find doctors and get care in an emergency.

Issue Tag: Health Care