New Study Shows Medicaid is Crucial Lifeline in Rural Communities
Cuts to Medicaid under consideration by the Trump administration and new Republican majorities in Congress could have a disproportionate impact on rural communities and small towns, according to a new study by the Center for Children and Families (CCF) at the Georgetown McCourt School of Public Policy. The study found that non-elderly adults and children in small towns and rural areas are more likely than those living in metro areas to rely on Medicaid/CHIP for their health insurance. Two of the study’s authors—Joan Alken, executive director of CCF and a research professor at the McCourt School, and Edwin Park, a research professor at the McCourt School—spoke with Spotlight about their findings. The transcript of the conversation has been lightly edited for length and clarity.
So, I guess to start, just to give a little context for why you wanted to do this study right now, I assume two of the big reasons are hospital closures in rural areas, and also the new administration talking about potential Medicaid cuts?
Edwin Park: We’ve done this report a couple times before in collaboration with a colleague at the University of North Carolina. And I think the intent of the report is to create a better understanding of who Medicaid serves because there’s probably not a widely shared awareness that Medicaid does tend to disproportionately benefit residents of rural areas in small towns relative to those living in metropolitan areas. We know that rural communities tend to have less access to insurance in terms of the jobs that are available and that there are often limited healthcare resources in a rural community, making Medicaid even more important. And as you say, there’s certainly a lot of discussion right now in Congress about instituting very deep cuts in federal Medicaid funding for state Medicaid programs and if those cuts are enacted, they would have particularly severe impacts on people in rural communities and small towns who rely on Medicaid today.
Could you briefly talk about the methodology?
We classify counties as either urban metropolitan counties or rural small-town counties that are not in metropolitan statistical areas and don’t have an urban core of more than 50,000 residents. And we look at Medicaid and CHIP coverage rates based on the American Community Survey from 2023.
For either of you, if you could then go through some of the major takeaways.
Joan Alker: I can kick it off. We’ve been working on these rural health issues and looking at the data for quite a few years now. And I think it has come as a surprise to many people that families in rural communities actually rely on Medicaid for their health coverage at higher rates than those in urban communities. And this really reflects one of the many health disparities that we see in our healthcare system, a geographic health disparity. Rural communities already face greater challenges on the health side because residents of rural communities have lower incomes. They tend to have higher incidents of chronic conditions, and they have a lot of provider shortages—and of course, rural hospitals have been closing, particularly in states that have not expanded Medicaid under the ACA. Those rural hospitals often are crucial sources of maternal care, and when you lose a hospital or a birthing center within a reasonable amount of distance, it’s hard for a rural community to thrive.
And so, we took a look at this data again to kind of see where things stood and indeed, for children and elderly adults in rural communities, they do rely on Medicaid for health insurance at greater rates. And this is important because as you know, Congress is considering very, very large cuts to Medicaid right now. In fact, it appears that Medicaid is the number one piggy bank they’re looking to, to finance their agenda, which includes tax cuts that will disproportionately benefit wealthy people. So, this is a huge, huge issue for rural communities. They have a lot at stake here.
Edwin, did you want to add to that?
Park: Just to point out that in 29 states, seniors in rural communities rely on Medicaid to a greater extent than in metro counties. And Medicaid for seniors includes coverage of nursing home care but also helps with Medicare premiums and cost sharing. So, it plays a very vital role for seniors as well in the majority of states.
And are there particular parts of the country that are more affected?
Alker: There are states that have higher rates of Medicaid coverage, but frankly, Medicaid is vital in every state for children, for births and for folks near the end of life, meaning the long-term care piece of nursing homes. Medicaid covers the majority of nursing home residents, and that doesn’t matter where you are. So, yes, we did see there are about six states where more than half of the children in rural areas are covered by Medicaid—New Mexico, Louisiana, Florida, South Carolina, Arkansas and Arizona.
And that brings up another point that just really jumped out at me from this data, which is that when you do an overlay of rural counties and tribal lands and reservations, you see, particularly for seniors, just very, very high rates of Medicaid enrollment. I know in the Pine Ridge Reservation and some of the counties in Arizona that are tribal lands, you’re seeing about two thirds of those elders are covered by Medicaid. So, these proposed cuts would just be devastating for American Indians and Alaskan native peoples, communities that are already struggling.
And did any of those six states take advantage of Medicaid expansion?
About half of them did. But we’re talking here about children. I’m glad you brought that up though, because I think the main debate in Medicaid over the last five to 10 years has been about Medicaid expansion and whether states should take that up. We’ve had 40 states opt in, and certainly in those states for adults, Medicaid is playing a big role. But Medicaid—and this year is the program’s 60th anniversary—has played many important roles. And I think a lot of people aren’t aware of that because so much of the conversation has been about expansion and it’s been about work requirements. And that’s really, frankly, a minor issue when you’re looking at what Congress wants to do, which is to cap the program to extract hundreds of billions, if not trillions of dollars from the Medicaid system. This is not about work requirements. This is about fundamentally undermining the program’s ability to do the many things that it does in our healthcare system.
Park: There’s a lot of research showing that rural hospitals tend to have thinner operating margins, but particularly those with a higher patient mix in terms of Medicaid coverage. And so if you are talking about withdrawing hundreds of billions of dollars or potentially trillions of dollars of federal funding over the next decade for the Medicaid program, making it harder for states to finance their share of the cost of Medicaid, you know that ultimately is going to result in fewer people covered, more compensated care, but also for those who continue to be covered by Medicaid, drastically reduced reimbursement rates. And that is going put a lot of these rural hospitals over the edge. They’d likely have to close their doors and if they remain open, they’re probably going to have to dramatically scale back the services they currently furnish.
That was my next question—if these cuts go through, what the impact would look like on the ground.
Alker: In terms of how a state could manage these cuts, I think the answer is they can’t. These cuts are so big that even the most well-intentioned and richest state could not raise taxes enough to compensate for the levels of funding they’re talking about pulling out. And states really only have a few ways to cut costs, which is to reduce the number of people who are eligible or who can enroll on the program to reduce the services that people are offered or to cut provider rates. I mean, it’s fairly simple and this is already a lean program. There are huge implications for state budgets too, and I’ll let Edwin pick up on that point.
Park: Nationally on average, 56% of all federal funding that goes into state budgets is coming from Medicaid. And so, if you are cutting that federal funding significantly, states are given a very difficult choice. They’re going to either have to significantly raise taxes or they’re going to have to cut other parts of the budget. They’re going to have to slash elementary and secondary school education spending and cut their Medicaid programs. States are essentially left holding the bag.
And have you found at all that this data is having an impact on the debate in some of those states?
Alker: I think it will have an impact, though of course we just released it. But we’ve done some work over the years on rural health, and we find that it really has an impact. I think most importantly, Medicaid is popular with the voters. Now they’re saying out loud their intentions to cut Medicaid by huge numbers, but during the presidential campaign, there was not one word spoken about Medicaid. President Trump said that he would protect Medicare and Social security. We feared that Medicaid would be a big target for cuts and indeed it is. But it is not popular.
Joan Alker, Executive Director of the Center for Children and Families and a Research Professor at the Georgetown McCourt School of Public Policy
Edwin Park, Research Professor at the Georgetown University McCourt School of Public Policy’s Center for Children and Families