Rejecting federal funds is devastating Oklahoma’s rural hospitals

Photo by  Spyros Papaspyropoulos  used under a Creative Commons license

Photo by Spyros Papaspyropoulos
used under a Creative Commons license

During negotiations over the Affordable Care Act, America’s hospitals looked at the landscape, took a deep breath, and decided to take one for the team. They agreed to accept cuts of $155 billion over ten years to help cover the costs of health reform, largely through decreased Medicare payments, figuring improvements in insurance coverage would make up the difference. But in 22 states, officials haven’t accepted federal funds to help expand health coverage to the low-income uninsured. This means that hospitals in non-expansion states are still treating high numbers of uninsured patients – and those costs aren’t being covered.

This isn’t a “self-inflicted wound” for hospitals, as some have contended. The law as originally approved by Congress required states to expand coverage or risk losing all Medicaid funds — a deal that was changed retroactively when the US Supreme Court made expansion optional. State leaders still have the option to expand health coverage at little cost to the state. But in Oklahoma, they haven’t done their part: uncompensated care expenditures haven’t dropped as expected to cover lower Medicare reimbursements, and hospitals are hemorrhaging as a result.

Median Operating Margin - Oklahoma Hospitals (2)The issue is particularly acute in rural areas. In Oklahoma in 2012, uncompensated care cost hospitals $547 million – on median, 6.1 percent of their budgets. In urban and suburban areas, whose residents are more likely to be insured, hospitals can typically ‘shift’ some of the costs of that care onto insured patients. But in rural hospitals, the issue is more acute. In 2012, 1 in 4 rural hospitals found that uncompensated care comprised more than 10 percent of their budget, according to the Oklahoma Hospital Association. In one hospital, uncompensated care was 17 percent of its budget. These costs are too high to be passed on to insured patients, and that’s leaving rural hospitals in the red – and could force closures.

Shuttering rural hospitals presents a very real danger to the lives of rural Oklahomans. The likelihood of patient survival is much higher if they receive treatment within an hour of traumatic injury or accident. Without rural hospitals, patients need to go much farther for care. Imagine traveling two hours or more following a heart attack or a broken hip. If rural hospitals close, that will be the new reality for many Oklahomans.

Between Medicare cuts from the Affordable Care Act and sequestration, Oklahoma hospitals expect to lose close to $3 billion between 2013 and 2022. But the Oklahoma Hospital Association projects that accepting federal funds to expand health coverage would result in $4 billion to the state’s hospitals over the same time period – more than covering the money lost.

We’re already seeing the positive effect of expanding health coverage in other states. Data from the US’s four largest hospital companies from the second quarter of 2013 through the second quarter of 2014 found that in expansion states, uninsured admissions dropped by between 48 and 72 percent. By contrast, in non-expansion states, the largest decrease in uninsured admission was 14 percent, or less than one-third of the drop in expansion states. One hospital system saw a decrease of only 2 percent, and another saw no change at all.

Clearly, other states that have expanded coverage are already reaping the benefits, and its track record shows that expanding coverage would be a good deal for Oklahoma. Both the Oklahoma Hospital Association and Leavitt Partners, a group hired by the Governor’s office to investigate possibilities for extending health coverage to low-income Oklahomans, recommend expanding the state’s home-grown Insure Oklahoma program. Doing so would keep the state’s critical rural hospitals above water, provide access to affordable health care for thousands of Oklahomans, and boost the economy. But in the meantime, Oklahoma is missing out, and our hospitals are hurting because of it. Fortunately, we know how to fix the problem. It’s just a matter of finding the will to do it.

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ABOUT THE AUTHOR

Carly Putnam joined OK Policy in January of 2014. She previously worked as an OK Policy intern. A Kansas City native, Carly graduated from the University of Tulsa in December 2013 with a BA in Sociology and Women’s and Gender Studies. As a student, she was a participant in the National Education for Women (N.E.W.) Leadership Institute and interned with Planned Parenthood. She is graduate of the Oklahoma Center for Nonprofits Nonprofit Management Certification Program, the Oklahoma Developmental Disabilities Council’s Partners in Policymaking program, and The Mine, a social entrepreneurship fellowship in Tulsa. She previously served as board president for United Campus Ministry at the University of Tulsa. At OK Policy, Carly supervises policy staff and conducts research focusing on health care and the safety net.

6 thoughts on “Rejecting federal funds is devastating Oklahoma’s rural hospitals

    1. What do you bet she gets a nice cushy exec position at Blue Cross and Blue Shield or Community Care after she vacates the mansion? Do governors get a pension? Does it come with a healthcare plan? Does the Oklahoma taxpayer PAY to insure her daughter? We really need to put an end to state and federal congressional welfare….

  1. We all know what the problem is and how to fix it. The same problem exists in every Southern Republican Controlled State.

    The Republican Controlled State Legislature will not approve the NO COST expansion of Medicaid. The Citizens of the State have paid into the Federal Tax System that is funding the Medicaid Expansion. That means that the State residences have paid for the program but the State will not accept the Money they paid into the Plan.

    This expansion will save thousands of lives in Oklahoma but the Republicans can NOT ADMIT that the ACA is a good Health Insurance Program.

    In Florida the Harvard Medical School has projected an additional 120,000 preventable deaths will hapen because the State will NOT allow for the expansion of Medicaid.

    1. I can’t admit that is a good insurance program, but its a start.

      If we can afford whatever trillion dollars to wage war we could at least provide basic health services for everyone.

  2. apetty, I agree with you.
    Health insurance is not a privilege; as the Republicans would like to have it.
    It is a right.

  3. If I remember correctly, the money provided to the states is funded 90% by the federall government and 10% by the state. In a few short years, by law the state will have to pay 90% of the program and the federal government then pays only 10 percent. So what is 90% of $1 billion? And since Oklahoma has a constitution that request us to balance the budget, what would 90% of $! billion do to our state budget? While the medical side will be well taken care of what happens to the rest of Oklahoma’s budget? Cuts in roads and bridges? Cuts in maintenance and services? Cut backs in state employees? Taxes and fees going dramatically up? Maybe this is why Gov. Fallin refused to ask for government money. What others don’t seem to understand is that anytime the government wants to give you something, especially if they say that it’s free, will always, always, cost you….the taxpayer.

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