What proposed Medicaid cuts could mean for rural communities, hospital access

Major cuts to Medicaid funding could have rural communities across the country facing widespread hospital closures and reduced access to health care, says Michael Shepherd, a health policy researcher at the University of Michigan. 

Shepherd, assistant professor of health management and policy at the U-M School of Public Health, studies the politics and policies surrounding rural health disparities, including rural hospital closures, the opioid epidemic and Medicaid policy. His research focuses on what he calls the "rural health spiral," how worsening health outcomes in rural areas can create a cycle where problems rarely get solved and support for government solutions decreases over time. 

He recently co-authored an op-ed examining how proposed budget cuts would disproportionately harm rural communities. Here, Shepherd discusses what these proposed changes could mean.

How important is Medicaid for rural communities?

Medicaid is incredibly vital for rural people, not only those who benefit directly, but for the survival of rural health care institutions that serve everyone. Twenty-three percent of rural Americans are insured by Medicaid, compared to 19% nationally. About half of rural children are covered by Medicaid, and it pays for over half of rural births.

Rural hospitals, mental health clinics and doctors' offices depend heavily on Medicaid reimbursements. Cuts to Medicaid threaten institutions that serve the broader rural public, even those with employer-sponsored or private insurance.

What happens when rural hospitals lose Medicaid funding?

Take McNairy County, Tennessee. In 2016, they lost their regional hospital, mostly because the state didn't expand Medicaid. When it closed, residents had to drive 45 minutes to an hour for care. If you're on Tennessee Medicaid, you can't cross the state border to Mississippi for covered care—you have to use in-state options that are even farther away.

Research shows that when a rural hospital closes, patients travel, on average, 20 miles farther for common care and 40 miles farther for specialized care. Every additional mile increases your health care risk for emergencies like strokes or heart attacks. Studies also show rural hospital closures lead to significant increases in mortality, and birthing outcomes and obstetric care suffer following closures.

How do Medicaid cuts affect people who aren't on Medicaid?

Hospitals in rural communities are often the largest employers. The health care sector can supply as many as 10% of the jobs in a rural community. Most rural areas don't have large employers beyond their public schools or hospitals.

If a hospital closes, you're talking about increasing unemployment, lowering incomes and people leaving the community to find work elsewhere. It's not just that people on Medicaid may lose benefits—everybody may lose access to health care, and many people will lose their jobs.

Even community mental health providers are very Medicaid-dependent. If you withdraw Medicaid benefits, people won't be able to access their mental health providers because those clinics rely on federal funding and Medicaid clients to stay open.

What does research show about states that expanded Medicaid versus those that didn't?

States that expanded Medicaid saw rural hospital closures drop to close to zero, while non-expansion states experienced continued spikes. My research shows that roughly 80% of rural hospitals that closed since the Affordable Care Act have been in Republican states that failed to expand Medicaid.

According to the Center for Healthcare Quality and Payment Reform, over 300 rural hospitals currently face "immediate risk" of closure—and that's without these proposed cuts. Rural hospitals operate on shoestring budgets and stay open primarily because of Medicaid reimbursements. These cuts would dramatically increase closure rates.

Why do politicians support cuts that could harm their own constituents?

This gets at what we call "accountability" in political science—whether voters can connect policy outcomes to the politicians responsible for them. There's a lot of research that shows voters often struggle to assign responsibility correctly, especially when policies have complex, delayed effects.

What I found in my research is that even when state Republicans chose not to expand Medicaid—which ultimately led to worse outcomes for rural hospitals—voters blamed Democrats and the Affordable Care Act for their experiences. This creates what I call the "rural health spiral," the worse things get, the less rural people trust government solutions, which leads to support for politicians who are less likely to use government to fix problems.

My research shows this pattern where Republicans can actually benefit politically from decisions that make things worse for their voters, while Democrats get penalized despite passing policies that objectively help similar communities. It's a function of our federal system, where national policies can have very different outcomes depending on state-level decisions, but voters often assign credit or blame to the president's party regardless.

What would you want people to know about the broader impact of these cuts?

Even people who aren't on Medicaid should be alarmed. If you live in a rural community, you're likely to lose access to health care yourself if these cuts happen, regardless of whether you have Medicaid.

What's remarkable is that Medicaid is popular across party lines. Survey data shows that 61% of Republicans, 71% of Independents and 83% of Democrats see Medicaid as important to their communities. These cuts aren't what people are demanding.