Economist: Medicaid expansion a rural issue

MILWAUKEE (AP) — Rural residents will likely benefit from the health care overhaul, but many will be hurt by their states’ refusal to expand Medicaid coverage, a health economist said Tuesday during a conference on rural health care.

Twenty-one states, including Wisconsin, have opted not to expand Medicaid eligibility, while another half-dozen are still debating the issue, said Tim McBride, a health economist with the Rural Policy Research Institute’s Center for Rural Health Policy Analysis.

He told hospital administrators and others gathered in Milwaukee that when researchers look at rural residents who could be covered by expanded Medicaid, more than half live in states that have opted out. In comparison, more than half of the urban residents eligible for coverage under the expansion live in states that are going forward with it.

“Not expanding Medicaid . . . is a rural issue,” McBride said.

He warned those at the conference that their hospitals, as well as patients, are likely to be affected because the expansion is being paid for, in part, by cutting reimbursement rates. That means hospitals in states that have opted out won’t get any of the federal expansion money but will still see rate cuts.

“I don’t see an upside to not expanding,” McBride said. “The truth is, this will be really important money for rural hospitals, rural health providers, rural communities.”

At the same time, McBride said the federal government has yet to grapple with increased spending on Medicaid, Medicare and Social Security. The overhaul will not significantly reduce health care costs, he said, adding, “I like to say we are going to rearrange the deck chairs on the Titanic.”

But the health care overhaul should help rural residents overall, he said, because they are less likely to have employer-provided insurance and more likely to be uninsured or rely on government-funded insurance than those in cities.

Ryan White, a hospital consultant with Eide Bailly LLP, said one concern is that more people who buy private insurance, including through the online exchanges being set up by the federal government and some states, could opt for plans with high deductibles. He said the lowest-cost plans offered through the exchanges could have deductibles as high as $7,000. That creates a problem if they get sick.

“A lot of the individuals signing up for those plans probably don’t have $7,000 sitting in a bank account to pay general hospital of Milwaukee,” White said.

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