FACT SHEET: Medicaid Works for Rural Americans

Submitted by Protect Our Care

This April marks the 7th annual Medicaid Awareness Month. About one in five – 66 million – Americans reside in rural areas across the United States and nearly 14 million are enrolled in Medicaid. Medicaid is a vital source of coverage for people across rural America, who are more likely to lack insurance, experience negative health outcomes, and have more barriers to accessing care. The Affordable Care Act’s (ACA) Medicaid expansion has been a critical part of working towards the goal of closing gaps in health outcomes for rural Americans. Medicaid expansion saves lives, helps keep rural hospitals open, improves families’ financial security, and boosts local economies. The success of Medicaid expansion across the country demonstrates the need for the 10 holdout states to finally expand their Medicaid programs to the 1.6 million people in the coverage gap who have no option for health coverage. 10 percent of rural Americans are uninsured and would benefit from the long awaited expansion. 

However, Republican elected leaders in 10 states refuse to implement Medicaid expansion, blocking 1.6 million from the access to essential health care and financial security Medicaid provides. These holdout states, located in the southern and midwest regions of the U.S. with significant rural populations, are leaving over $13 billion in federal Medicaid funding on the table. In addition to blocking Medicaid expansion in 10 states, MAGA-Republicans want to cut trillions from Medicaid by introducing onerous work reporting requirements and radically restructuring the program through block grants. Donald Trump has promised to follow through on his plan to repeal the ACA, which would end Medicaid expansion and throw the entire health care system into chaos, risking coverage for at least 45 million Americans and ending protections for Americans with preexisting conditions. On the other hand, President Biden and Democrats in Congress have worked to protect and strengthen Medicaid by creating multi-billion dollar incentives for Medicaid expansion, stopping onerous work requirements, pushing for expanded postpartum coverage, and working to minimize the impacts of Medicaid unwinding. 

By The Numbers

• Millions Of Rural Americans Depend On Medicaid. Nearly 14 million Medicaid enrollees reside in rural areas.

• Medicaid Strengthens Health In Rural America. Overall, rural residents have worse health outcomes and tend to be older, poorer, and sicker than those in urban areas.

• Rural States Need Medicaid. Uninsurance rates in rural America are 2 to 3 percentage points higher than in urban areas. States that expanded Medicaid experienced a 7 point increase in insured rates after the passage of the Affordable Care Act.

• Medicaid Helps Keep Rural Hospitals Open. Since 2005, more than 150 rural hospitals have closed, including 20 closures in 2020 alone. Rural hospitals in Medicaid expansion states are 62 percent less likely to close. In 2024, over 400 rural hospitals are at risk of closing in the near future. When hospitals face financial hardship, obstetric services are among the first to be cut. Fewer than half of all rural counties in the United States had hospital-based obstetric care.

• Rural Hospitals Strengthen Local Economies. Hospitals employ ten percent of total county employment. Rural areas with hospital closures experience economic downturns with a 14 percent reduction in country employment. 418 rural hospitals are at risk of closing, and estimated that if those hospitals shut down, over 90,000 health care jobs in rural communities would be lost.

How Medicaid Expansion Helps Rural Americans

Medicaid Expansion Saves Lives. Medicaid expansion has been proven to increase access to care, improve financial security, and save lives. A study published in the Lancet found that Medicaid expansion reduced all-cause of mortality. Mortality rates in rural areas are much higher than in urban areas due to a disparity in health care access and increased prevalence of fatal diseases, suicide, and overdoses. 

Medicaid Expansion Reduces Income Inequality And Medical Debt. Medicaid expansion reduces poverty and income inequality across the board by helping low income families access care without jeopardizing income that they may use for other basic living expenses. A 2019 Health Affairs study found that Medicare, Medicaid, and premium subsidies account for one-third of poverty reduction in households without a disability recipient. Medicaid has also been shown to reduce the prevalence of medical debt with nearly 80 percent of the counties with the highest medical debt being from states that haven’t yet expanded Medicaid. 

Medicaid Expansion Plays A Central Role In Fighting The Opioid Crisis. Rural America largely lacks the ability to treat substance use disorders with 65 percent of rural counties lacking the ability to prescribe buprenorphine, an effective drug used to treat opioid dependency. Starting in 2020, Medicaid began covering all medications, therapies, and counseling services that are approved by the Food and Drug Administration to treat opioid use disorders. Medicaid covers an estimated four in ten people with an opioid use disorder. Medicaid expansion in the remaining 10 states is a necessary foundation to help low-income, rural families dealing with higher rates of substance use disorders. 

Medicaid Expansion Is A Lifeline For Rural Hospitals

In states that haven’t expanded Medicaid, rural hospitals are drowning under financial pressure. Low occupancy rates, high levels of uncompensated care, competition with other hospitals, and struggling local economies create a financial burden that rural hospitals face all over the country. Since 2010, 138 rural hospitals have closed, including 20 closures in 2020 and 8 in 2023. In 2024, over 400 hospitals are at risk of closure.

Medicaid Helps Rural Hospitals Stay Open. Rural hospitals in Medicaid expansion states are 62 percent less likely to close. The two most common types of supplemental Medicaid payments are disproportionate share hospital payments, that pay hospitals for uncompensated care for Medicaid and uninsured patients, and upper limit payments, which supplement the gap between fee-for-service Medicaid base payments and the amount that Medicare covers. Some states are also testing the use of global hospital budgets to increase care and improve health outcomes in rural hospitals.

Closure Of Specialized Care And Obstetrical Services. Some hospitals opt to close specific services or facilities that cause patients in rural areas to have to travel further for specialized care. On average, when a rural hospital closes patients have to travel over 20 miles further to access inpatient or emergency care. A 2021 study found that fewer than half of all rural counties in the United States had hospital-based obstetric care. When hospitals face financial hardship, obstetric services are among the first to be cut. Black and Native American women in rural areas are particularly at risk. Black and Native American women are two to three times more likely to die from pregnancy-related causes than white women.

Medicaid Expansion Boosts State Budgets. Medicaid expansion generates enough savings that it is well worth the initial cost, eventually helping boost states budgets. Expansion allows states to access federally matched funds for some people covered by traditional Medicaid. The American Rescue Plan (ARP) provides states with additional funding from the federal government. From 2022 to 2025, the states that haven’t yet expanded Medicaid would gain $90 billion in federal matching funds in addition to $17.6 billion in ARP bonus payments and $6.6 billion from higher state and local tax revenue.

Rural Hospitals Are Large Employers In Their Communities. For rural areas that often have high unemployment rates, hospitals contribute significantly to local economies by employing large numbers of people with relatively high-paying jobs. Rural hospitals typically account for about 5 percent of a rural county’s total employment. Beyond just being a source of jobs, hospitals tend to pay higher wages than other rural industries. Hospital employees with an associate’s degree are paid an average of 21 percent higher than the rest of the population.

Rural Hospitals Boost Local Economies. Besides hospitals providing higher paying jobs in the health care sector, rural hospitals also stimulate the local economies of other industries. Hospitals purchase goods or services from local private businesses which helps stabilize and reinforces the local economy. In turn, strong private sector employment allows for more tax dollars for public goods, such as education and safety services.

Protect Our Care will continue to host events and activities throughout Medicaid Awareness Month, which includes the following themes each week:

• Week 1: Republican threats to Medicaid. Week one will focus on how Republicans are actively seeking cuts to Medicaid while GOP leaders in 10 states continue to block Medicaid expansion. 

• Week 2: Medicaid helps people of color and rural Americans. Week two will highlight how Medicaid is a critical tool to expand access to coverage, which together with policies that address other social and structural determinants of health, narrow stark disparities in health care, improve families’ financial security, and make people healthier. 

• Week 3: Medicaid helps women and kids. Week three will bring attention to the vital role of Medicaid for mothers and children across the country.

• Week 4: Medicaid helps seniors and people with disabilities. The final week will focus on how Medicaid helps seniors and people with disabilities access lifesaving care.