New Wave of Medicaid Expansion? Maybe!

Written by:
Benjamin Geyerhahn
April 22, 2021

Medicaid Expansion is a bogeyman among conservative lawmakers. Republicans have resisted the program to a large degree across the country even though doing so resulted in the shuttering of rural hospitals across their states, and downstream damage to public health. When the Biden administration offered new incentives for states to accept Medicaid expansion, most political observers thought it unlikely to convince the 13 states that have resisted Expansion. But, there is some reason to think things may change.

Medicaid Expansion was controversial for purely ideological reasons when the Affordable Care Act passed in 2010. Republicans Governors and state legislators opposed Medicaid as welfare and therefore rejected raising Medicaid eligibility even though the cost of expanded eligibility is borne substantially by the federal government under the ACA.

This ideological stance turns out to have real costs for Republican constituents. The most significant institutional beneficiaries of the expanded Medicaid eligibility are rural hospitals, which were struggling before the passage of the ACA. Emergency rooms are required to serve any patient that presents themselves. With increased urbanization, rural communities have gotten poorer, and rural hospitals are seeing fewer patients with private insurance. The result is declining revenues, and eventually bankruptcy.

Medicaid Expansion provides insurance for the poor in rural communities. As a result, hospitals have more paying patients. 

Hospitals are often the biggest employers in rural regions, so what’s good for the hospital is usually good for the surrounding community.

Despite the financial incentives, many conservative states have declined Medicaid Expansion. And their citizens have paid a price.

For states, like Texas, that adopted this stance, the decision not to adopt Medicaid Expansion has been catastrophic for its hospital system.

The Texas Organization of Rural & Community Hospitals (TORCH) reports the following:

  • Texas leads the nation in rural hospital closures.
  • 27 Texas rural hospital closures (permanently or temporarily) have occurred in 22 communities since the beginning of 2010.
  • Nationally, more than 70 rural hospitals have closed in the same time frame since the beginning of 2010.
  • Texas had approximately 300 rural hospitals in the 1960s and is down to 158 rural hospitals currently.
  • Closures have a ripple effect in the community, reducing sales tax revenue to local governments, reducing school student numbers driving downstate payments to local school systems, and hurting local businesses across the community.

(Texas Organization of Rural & Community Hospitals, 2019).

Where politicians have failed to act, the public has stepped in. Several states have passed Medicaid Expansion by referendum. While under Republican leadership: the citizens of Maine, Montana, Missouri, Nebraska, Oklahoma, and Utah all voted to bring Medicaid Expansion to their states.

Taken together, the popularity of Medicaid Expansion and rural hospital funding needs may be melting resistance among conservative lawmakers. So when President Biden included further incentives for adopting Medicaid Expansion, we have seen several conservative politicians take careful steps toward the policy. Alabama Governor Kay Ivey recently expressed interest in considering Medicaid Expansion, as did Mississippi Insurance Commissioner Mike Chaney, both Republicans.

What will happen? No one knows, but the passage of time, the success of the program, and pain associated with not expanding Medicaid have moved the politics in only one direction, toward expansion.