Counties wary of potential Medicaid cuts

County-owned hospitals and nursing homes could see Medicaid cuts and possibly face closing under Senate's BCRA 

The administrator for Sunnycrest Manor, a 100-year old county-owned and operated nursing home in Dubuque County, Iowa, is keeping a wary eye on the healthcare bill being deliberated by the Senate.

The Congressional Budget Office (CBO) predicts that if passed, the new law would kick 15 million people off of Medicaid and cut billions of dollars to the program that pays for healthcare for the poor. If passed, the legislation would leave local government to pick up the pieces.

Counties deliver Medicaid-eligible services through:

• 907 County-supported hospitals
• 883 County-supported nursing homes
• 1,944 Local health departments

Source: NACo Counties Futures Lab

 

“We’re praying, we’re praying,” said Cris Kirsch, the administrator at Sunnycrest. The reason — 102 of the 105 residents there are on Medicaid.

“We are a county facility, so any deficit is covered by a supplement that is paid by the county taxpayers,” she said. “We would have to ask for an increase to that supplement. This would not be sustainable with the other priorities that the county has.”

There are 983 state or county-owned hospitals in the country, according to the American Hospital Association, from the group’s 2015 survey.

County-owned hospitals and nursing homes like Sunnycrest could see Medicaid cuts and possibly face closing under the Senate Republicans’ Better Care Reconciliation Act.

The plan would cut hundreds of billions of dollars in funding over the next decade from the Medicaid program, which provides coverage to 75 million low-income Americans. 

In all, 22 million people would lose health coverage in the next decade under the bill, the Congressional Budget Office reported. Of those, 15 million would lose Medicaid coverage, which in addition to helping low-income people in nursing homes and hospitals, is also used by children, pregnant women and the disabled.

CBO estimates cuts in federal Medicaid funding of $772 billion over the next 10 years, forcing the closure of hundreds of rural hospitals, nursing homes, clinics and pharmacies, said Gordon Bonnyman, a nationally recognized advocate for social justice and staff attorney at the Tennessee Justice Center in Nashville.

Since 2010, 80 rural hospitals have closed and 673 are at risk of closing, according to iVantage Health Analytics, including 210 at “extreme risk” of closing.

Medicaid cuts would obviously be a big problem for Sunnycrest. In addition to impacting the residents it serves, the facility also counts about 200 full-time and part-time employees.

It’s much the same picture in Barry County, Mich., where 85 percent of the residents at Thornapple Manor, a county-owned assisted living facility, rely on Medicaid, said Don Haney, administrator. More than 300 employees care for, on average, 154 people per day at its 161-bed building.

Under potential Medicaid cuts, hospitals and nursing homes would not only see patients lose healthcare services, but employees would lose their jobs.

About 75 percent of Thornapple’s expenses are employee salaries and benefits. “That’s the tough part,” Haney said. “I can’t cut food and utilities. Our number one cost is personnel. There’s no magic safety net.”

County-owned hospitals also wary of Medicaid cuts

County-owned hospitals, particularly rural ones, are also wary of the possible Medicaid cuts being considered on Capitol Hill.

Nearly two-thirds (63 percent) of inpatient care in rural hospitals are reimbursed by Medicare or Medicaid; the figure is about 49 percent in urban hospitals.

In Tennessee, rural Houston County, located northwest of Nashville with a population of fewer than 9,000, purchased a private hospital four years ago that was about to close.

Today, Houston County Community Hospital is kept afloat courtesy of a 60-cent hike in property taxes that brings in $12,000 a year. Yet, the hospital also needed to find $300,000 to cut in its budget last year and had to let some employees go.

The Tennessee Justice Center predicts that if Congress goes through with cuts to Medicaid, Houston County Community Hospital and 30 others in the state may have to close their doors. The center estimates a cut of $550 million a year in Tennessee.

 “We’re a little better off than some because we’re county-owned,” Houston County Mayor George Clark said. “If private hospitals see their profits fall, they’ll close them.”

By contrast, he said, the first priority of investor-owned hospitals, especially those owned by publicly-traded corporations “is to return profit to their owners. That takes priority, which means they have less willingness to hang in with the county when financial times get rough,” he said.

“If a distant corporation owns a hospital that is losing money, it is much quicker to close it, and there is little that the local community can do to prevent that.”

“As a county mayor, it’s not all dollars and cents, it’s about saving people’s lives,” said Clark, who has been in office since 1982.

Local government, Bonnyman explained, “may have the will to sustain a local hospital, but not the capacity. Corporate owners may have the capacity, but not the will.”

Medicaid changes would ‘rapidly accelerate closings’

Medicaid is especially important to counties in rural areas.

Over 70 percent of America’s counties have populations of fewer than 50,000, and Medicaid covers 21 percent of rural residents, compared to only 16 percent of those who reside in urban areas. Medicaid payments account for more than 14 percent of rural hospitals’ gross revenues.

If federal policymakers fail to take into account the vulnerability of rural hospitals as they reform federal health programs, it is likely that numerous rural hospitals will fail within the next few years, according to a study by Healthcare Management Partners, LLC.

Medicaid changes now under consideration would, if enacted, “rapidly accelerate the rate of closings,” according to the study.

Clark said he has written to his county’s representatives in Congress, including Sens. Lamar Alexander (R), Bob Corker (R) and Rep. Marsha Blackburn (R).

“I think letters and phone calls do make a difference,” he said.

“This bill coming up can really hurt, it’s not just Tennessee,” Clark noted. “Let’s hope they get together and come up with something reasonable.”