Rural Hospitals Have Fared Worse Financially in States that Haven’t Expanded Medicaid Coverage

Rural hospitals fared worse financially in states that have not expanded their Medicaid programs under the Affordable Care Act than in states that expanded Medicaid, a new KFF analysis finds.

Nearly one third of all rural hospitals nationally are in the 11 states that have not approved the expansion of their Medicaid programs to cover low-income childless adults, and concerns about their ongoing viability has been an issue in legislative debates about whether to do so.

The analysis reveals that the median operating margin for rural hospitals has been consistently higher in states that have expanded their Medicaid programs than in non-expansion states from July 2017 through June 2022, although the financial stability of individual rural hospitals varies widely.

For the most recent period, from July 2021 through June 2022, the median operating margins for rural hospitals in states that have not expanded their Medicaid programs was 2.2%, compared to 3.9% in expansion states, based on the 438 hospitals analyzed.

If not for federal COVID-19 relief funds, rural hospitals would be facing even more challenging times as their finances have worsened, with median operating margins dipping to 1.2% in expansion states and -0.7% in non-expansion states when subtracting out documented relief funds.

Based on an analysis of hospital cost reports, Rural Hospitals Face Renewed Financial Challenges, Especially in States That Have Not Expanded Medicaid is part of KFF’s expanding work examining the business practices of hospitals and other providers and their impact on costs and affordability.