Health Insurance Marketplaces, Medicaid, and Uncompensated Care: The Rural Impact

Research center:
Lead researcher:
Project funded:
September 2016
Project completed:
January 2018

Problem statement: The Affordable Care Act of 2010 (ACA) was expected to reduce the burden of uncompensated care on providers, which has been an increasing concern throughout the United States, particularly in rural areas. The burden was predicted to fall as the number of uninsured dropped after implementation of HIMs and Medicaid expansion. However, because of variation in state decisions to expand Medicaid and in enrollment through HIMs, rates of uninsurance have dropped more rapidly in some states than in others. As a result, some states will be more impacted by changes in DSH payment (although federal payments will continue to be a function of uninsurance rates, they will be lower in all states), as well as by changing trends in uncompensated care rates. Therefore, many areas will experience threats to provider payment and to their local economies in the form of consumer debt incurred for healthcare expenses. This increased debt is occurring due to the increase in high-deductible plans in many areas, in combination with the fact lower-income individuals and families often enroll in such plans.

Methods and data: We first examined HIM plan data at the county level to produce descriptive analysis of any differences in the prevalence of high-deductible plans in rural as compared to urban areas. We then combined data from multiple sources, including HIM enrollment and deductible data; Medical Expenditure Panel Survey (MEPS) data; and other county-level information on health, spending, and income demographics, which allowed us to project the likely amount of uncompensated care costs generated by healthcare consumers in each state in 2018 and beyond. We reported these results with a focus on the "most" rural states in terms of population percentage and density.

Policy relevance: Going forward, it is important to understand how Medicaid nonexpansion, large DSH cuts, and higher amounts of uncompensated care are contributing to funding for healthcare services in rural areas for all providers, to allow rural advocates to use this information when developing policy interventions and health insurance literacy strategies. Medicaid expansion is a policy decision that can be revisited in nonexpansion states, and outreach and education can be improved to educate consumers on the risks of high out-of-pocket costs that can be incurred with high-deductible plans. Other interventions could include incentives or requirements that insurance firms change the structure of their plans to reduce the initial out-of-pocket costs within the high-deductible plans or change their service areas to create more even risk pooling and thus less variation among plan costs in rural and urban areas.


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    Date: 02/2019
    This paper focuses on unique challenges in health insurance markets facing rural people, providers, and places, identifying their origins in what economists call "market failures," defined narrowly or broadly. We conclude with observations about the current landscape of rural insurance markets and identify issues policy makers should consider.
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