Medicaid Expansion Fails to Deliver on Promises

Medicaid expansion is failing states across the nation according to a recent Foundation for Government Accountability (FGA) report. The report found states that have expanded Medicaid have faced more hospital closures than states that haven’t expanded the program. Of course, for years, advocates have claimed that expansion would be a necessary provision for financial health and job security for hospitals. Though, as suspected, data reveals the opposite. More accurately, non-expansion states have seen improved profitability, a larger bed capacity, and increased job growth. 

For quite some time, expansion advocates have made the promise that Medicaid expansion would lead to economic booms for states, creating jobs and improving hospital finances, but the program’s launch clearly tells a different story.

By expanding Medicaid through the Affordable Care Act (ACA), colloquially known as “Obamacare,” the federal government hoped to provide care for a larger share of low-income Americans. Under the ACA, states now have the option to expand their Medicaid programs to cover adults 65 and under with incomes up to 138% of the federal poverty level and an enhanced federal matching rate (FMAP) for their expansion populations. FMAP varies by state but allows the Centers for Medicare & Medicaid Services to reimburse each state for a percentage of its total Medicaid expenditures. As of now, 38 states have adopted Medicaid expansion.

States that have enacted the expansion are consequently awaiting success but face unrealized promises. Moreover, in the first year of the program, nearly 40% of expansion states lost hospital jobs.

Here are the grim statistics from FGA’s report:

• 1 in 5 expansion states saw hospital job losses.
• From 2013 to 2016, Medicaid shortfalls at hospitals in expansion states grew by nearly 50%.
• Nearly 50 hospitals, many of which were rural facilities, shut their doors after expansion was implemented.
• Only 5% of hospitals directly cited a lack of Medicaid expansion in their list of reasons for closure; however, half of these hospitals were involved in alleged fraud or severe financial malpractice.
• 1 in 4 rural hospitals in expansion states are at risk for closure.

The report also highlights the flaws in the health systems of Appalachian states, many of which have expanded Medicaid. The report states that the Ohio Valley Medical Center in Wheeling, West Virginia and East Ohio Regional Hospital in Martins Ferry, Ohio closed in 2019 resulting in the release of roughly 1,200 hospital workers. According to the report, hospitals partly accredited the closures, creating $37 million in losses, due to the “lower-reimbursing Medicaid program.”

Likewise, in the month prior to expansion, West Virginia had 40,100 hospital jobs. A year later, that number fell to 39,728 – the opposite of what has been seen in non-expansion states. States that have maintained non-expansion Medicaid, over a period of five years, enjoyed 14% faster hospital job growth than expansion states. 

Many states across the nation are still facing the same health care issues from before implementation of Medicaid expansion. Despite haughty claims that Medicaid expansion would be the elixir to cure hospital pains, the evidence is clear that the expansion “tool” is just not enough. Hospitals continue to close.

Jessica Dobrinsky Harris is a Policy Analyst at the Cardinal Institute for WV Policy.

This article was originally published by RealClearPolicy and made available via RealClearWire.