A proposed rule change for Medicaid funding would have significant adverse financial implications for hospitals across the state, with one estimate saying the new rule would result in an $11 billion reckoning upon Texas health care.
The proposal comes at a time that already is difficult for rural hospitals, which have closed at an alarming rate across the state, leaving gaping holes in the fabric of a community. A majority of rural hospitals already operate at an economic loss, and an additional blow to the bottom line may very well be more than can be absorbed. The other option, equally unappetizing, is a tax increase that would likely spark an uproar of a different sort in the community.
When there is no local option for health care, it reverberates throughout. In some cases, residents vote with their feet and move to another community. There can be a cascade of negative consequences when the community’s economic engine of health care is interrupted.
The U.S. Chamber of Commerce has said as much in throwing its weight behind opposing the proposal. That organization says the rule risks “detrimental economic ramifications on communities across the country.” Likewise, the National Governors Association has said the proposal should be withdrawn because of its “significant and broad impacts” in many states.
The proposal will change how certain federal matching Medicaid funds are calculated, which will result in reductions. The new rule will restrict categories of state and local money used to calculate federal matching funds. This change will cause tax dollars to count as “public funds” in the calculation but not allow money from other sources such as patient revenue, grants or lease income, virtually guaranteeing a decline.
The U.S. Centers for Medicare and Medicaid Services insist the change is necessary to ensure fiscal integrity. It says there have been rapid spending increases in the program that have become especially pronounced over the past few years.
Public comment on the proposal closed earlier this month, but opposition to the change includes health care advocates, hospital organizations and other groups that see the new rule as certain to wreak economic havoc. Thus far, the federal agency has not disclosed when the proposal might take effect.
“This is as scary as anything we have dealt with in my 20 or so years in rural health care,” John Henderson, president of the Texas Organization of Rural & Community Hospitals, told us. “I’m scared. We would see an acceleration of rural hospital closures (if that happens), and Texas already leads the country in that regard.”
More than two dozen rural hospitals across Texas have closed since 2010. Of the approximately 160 remaining, about half operate at a loss.
The consequences of the proposal are clear. It would have an adverse effect on the quality of health care by further reducing the number of operators in the state, and that would impact accessibility and affordability for patients.
“With $11 billion at stake for Texas hospitals, this regulation would hurt patients,” said Carrie Williams, a spokeswoman for the Texas Hospital Association. “Taxes will go up, rural hospitals will close, services would be cut, and access to care would suffer.”
This proposal must be withdrawn, not just for the sake of Texas hospitals, but for the sake of Texas patients.