rural barns
Image courtesy Donald Lee Pardue, flickr creative commons

Rural hospitals have been shown to be at particular risk when state’s decide not to expand Medicaid.

By Rose Hoban

Since 2013, health care advocates have been pressing legislators and North Carolina Gov. Pat McCrory to allow for the expansion of Medicaid, the state and federal program that covers health care costs for low income children, some of their parents, pregnant women, people with disabilities and poor elderly.

Advocates have held rallies, delivered petitions and letters, pleaded in person, and criticized leaders in the media and pointed to other states such as Indiana and Ohio, where Republican governors have made the decision to expand the program.

All to no avail.

But a new coalition of health care advocates think they have a winning argument for Medicaid expansion, and it rests on the economic woes of North Carolina’s rural population.

“Arguably no other state in the country was hit harder by the Great Recession,” said Jason Gray, a policy fellow at the North Carolina Rural Center. “Because of North Carolina’s historic reliance on manufacturing and particularly as a financial center, we took it a lot harder, recovery was slow to kick off statewide.”

Map of which states have accepted Medicaid expansion. North Carolina is one of 19 which have refused to expand the program.
Map courtesy: Kaiser Family Foundation

Rural counties, where much of that manufacturing is traditionally based, have been slowest to recover, Gray said.

And he and other advocates for rural North Carolina are focusing their efforts on how those counties potentially have the most to gain from Medicaid expansion, where the economic activity created by health care could create  thousands of decent-paying jobs.

Jobs, jobs, jobs?

According to Gray’s analysis of N.C. Department of Commerce data, 22 of the state’s 100 counties had less economic activity in 2015 than they did at the height of the economic downturn in 2010. The data also showed that there are still 10 to 12 counties that are still losing employment in the wake of 2010, or at least not gaining jobs.

“We had 22 counties that had a net reduction in earnings that when you put it in 2015 real dollars, it’s 430-some million dollars in reduction in those counties,” he said.

For those counties, the recovery has been “very, very slow,” Gray said. “For every job we’ve lost to globalization, we’ve probably lost four or five just to technology.”

Fewer jobs are coming back and most are not the low-skill, low-education jobs that raised many in previous generations into the middle class. Instead, they are low-wage jobs without benefits, such as health insurance.

He argues the jobs created by Medicaid expansion would be better paying and likely have benefits. In North Carolina, Medicaid expansion would cover an estimated 300,000 to 500,000 new enrollees, two-thirds of whom live in families with members working at low income jobs without health insurance. And the newly covered people would ideally start going to doctors for preventative care, rather than showing up at the emergency room when their health problems are advanced – and more expensive.

Gray took numbers created by economists on how much economic activity would be generated by expanding Medicaid in rural counties and found “for the counties that we consider rural, it comes to about $5.7 billion in economic effect.”

He said this calculation shouldn’t be lost on lawmakers who spent a good part of the past year’s legislative session arguing about how to rejigger the state’s Job Development Investment Grants program which gives businesses tax incentives to relocate jobs to rural counties.

“For the 40 tier one counties, our most economically distressed counties, Medicaid expansion means over $3 billion dollars,” Gray said. “There’s no policy issue that I can push that can have stimulus impact of that.”

The North Carolina Department of Commerce annually ranks the state’s 100 counties based on economic well-being and assigns each a tier designation. The 40 most distressed counties are designated as Tier 1, the next 40 as Tier 2 and the 20 least distressed as Tier 3. This tier system is incorporated into various state programs to encourage economic activity in the less prosperous areas of the state.
The North Carolina Department of Commerce annually ranks the state’s 100 counties based on economic well-being and assigns each a tier designation. The 40 most distressed counties are designated as Tier 1, the next 40 as Tier 2 and the 20 least distressed as Tier 3. This tier system is incorporated into various state programs to encourage economic activity in the less prosperous areas of the state. Map courtesy NCDC

Chambers of Commerce in several conservative-leaning states have come to the same conclusion; the chambers in Georgia and Virginia have both come out in favor of expansion.

According to spokeswoman Kate Payne, the North Carolina Chamber does not have a position on Medicaid expansion.

Paying customers

Gray’s analysis has given health advocates a new framework for talking with legislative leaders at the General Assembly, who have, for years, essentially said there’s no way they’ll vote to expand the program.

“Shouting across the chasms has not been very effective in moving the conversation about closing the coverage gap,” said longtime public health advocate Peg O’Connell, who lobbies legislators on public health issues.

O’Connell is part of a new coalition called Care4Carolina, which she said wants to show that “everyone has a stake in this conversation.”

O’Connell and others have enlisted large voluntary health organizations like the American Heart Association and the American Cancer Society, advocacy groups and community health centers, along with the Novant Health system, which has 13 hospitals throughout the Western Piedmont region.

Headshot of Jason Gray
NC Rural Center’s Jason Gray. LinkedIn photo.

O’Connell said one fact driving their advocacy is that a number of rural hospitals in North Carolina are teetering on the brink of financial collapse.

Gray said the NC Hospital Association won’t say which rural hospitals are in financial jeopardy, but the number is between six and 16. He said the facilities are likely in counties where there are fewer patients with well-financed commercial insurance and too many people who are unable to pay.

That scenario matches findings by UNC-Chapel Hill health economist Mark Holmes, who found this spring that not expanding Medicaid contributed to the failure of more than a dozen hospitals in non-expansion states.

Rural quality of life

According to the NC Hospital Association, the state’s hospitals gave away about a billion dollars in charity care last year, something that’s also hurt the bottom lines of small hospitals in particular.  Hospital Association leaders say that’s on top of hundreds of millions in bad debt from patients who can’t pay.

Community health centers see this problem too, said Karen Frazier, who works at the Siler City clinic run by Piedmont Health Services.

”We don’t have funds there, so if a patient comes in to our clinic, we have to turn them down,” Frazier said. “If you’re having to turn down that patient, that’s loss of money for us.”

Pamela Tripp, head of Commwell Health, another network of community health centers stretching from Johnston to Brunswick Counties said about two thirds of their patients are uninsured and pay on the sliding scale.

“Most of them are working,” Tripp said. “When you define the poverty level, you’re talking about 76 percent of what we serve is at 150 percent of the federal poverty level or lower. For a family of four that’s about $36,000 a year.”

Gray said it’s going to be hard to draw industries to rural counties if hospitals close and potential workers are unwell.

“If the county is losing its family physicians or its hospital is in danger of closing because it’s not financially sustainable… then it is hard to keep the businesses you‘ve got and you can’t recruit new businesses,” Gray said. “So there is a community, civic self-interest issue that this affects far beyond the 500,000 people who would benefit from getting health care coverage.”

Gray said he’s agnostic about what form a Medicaid expansion would take, but he’ll be preaching the gospel of the numbers to legislators in the run-up to the coming legislative long session which begins in January.

“The status quo is unacceptable. We either need to accept the federal expand or craft our own alternative,” he said.

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Rose Hoban is the founder and editor of NC Health News, as well as being the state government reporter. Hoban has been a registered nurse since 1992, but transitioned to journalism after earning degrees...

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