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Closing Coverage Gap a Crucial Step for Health Equity in Rural Communities of Color

Policymakers should permanently close the Medicaid coverage gap as part of economic recovery legislation, in order to make affordable health coverage accessible to over 2 million low-income people who now lack this access because their state has refused to expand Medicaid. People in rural communities, especially people of color, are among those who would most benefit, we explain in a new paper. That’s because closing the coverage gap would provide a pathway not just to affordable coverage, but to greater availability of services in rural areas in non-expansion states, where some health facilities have curtailed them.

The Affordable Care Act called for expanding Medicaid to all non-elderly adults with incomes up to 138 percent of the federal poverty line. But 12 states still haven’t done so, meaning a parent of two, for example, must have earnings below about $9,000 a year to qualify for Medicaid in a typical non-expansion state, compared to earnings below $30,300 in most expansion states.

People of color make up about 60 percent of those in the coverage gap, higher than their 41 percent share of the adult, non-elderly population in non-expansion states. This reflects economic, educational, and housing injustices that lead to higher rates of poverty for people of color and over-representation in low-paid jobs that don’t offer employer coverage. Moreover, many of the states that have refused to adopt the expansion have a long history of policy decisions, based on racist views of who deserves to get health services, that restricted access to coverage in the past and continue to do so today. Closing the gap is therefore a crucial step toward health equity, where everyone has a fair opportunity to achieve the best health possible.

Closing the gap would also make access to care more equitable by improving the stability of health systems that people of color rely on. Most of the funds for closing the coverage gap would go to payments for health care services, reducing uncompensated care and allowing more rural hospitals, safety net hospitals, and community health centers — many of which disproportionately serve people with low incomes and people of color — to stay open and even to provide more services in their communities.

Rural hospital closures have been pervasive in non-expansion states. Of the ten states with the most rural hospital closures since 2010, all but two are non-expansion states — and the two that aren’t, Oklahoma and Missouri, only began their expansions in 2021. Rural counties in the South are racially and ethnically diverse, and in some non-expansion states, closed rural hospitals were more likely to be in counties with a higher share of Black residents. (See interactive map below.)

For example, six out of the nine rural hospitals that closed in Georgia since 2005 were in counties with higher shares of people of color compared to the statewide average: five had a higher share of Black residents and one a higher share of Latino residents. Five out of eight shuttered rural hospitals in Florida and all four shuttered rural hospitals in South Carolina were in counties with shares of Black residents above the state average.

Similar disparities exist for rural hospitals at risk of closure. Residents served by rural hospitals at high risk of financial distress are more likely to be Black compared to residents served by hospitals not at risk, one study found. Closing the coverage gap could reduce financial strain for these at-risk hospitals, because changes in uncompensated care are strongly related to changes in uninsured rates. And these data highlight how rural hospital closures and financial distress can affect Black and brown people, who are often left out of discussions about rural health.

Closing the coverage gap would also benefit community health centers, over half of which are in rural areas. People of color represent about 62 percent of community health center patients but 40 percent of the overall U.S. population. Such centers in expansion states were likelier than those in non-expansion states to report improvements in financial stability since 2010 and coordination of care with community social service providers, a 2018 survey found. Medicaid expansion was also associated with more community health center patients receiving screenings and treatment for conditions like asthma and hypertension, the latter condition seeing the greatest improvements for Hispanic patients in rural community health centers.

Medicaid expansion also helped bring new federal funding for services provided through Indian Health Services, tribal health programs, and facilities contracted to provide services for American Indians. With new revenue from Medicaid expansion, Indian Health Services in Montana was able to increase the amount of care they provide and allow more people to receive critical preventive care. Medicaid is an important source of coverage for American Indians and Alaska Natives (AIAN); about 55,000 non-elderly AIAN adults would gain coverage if the remaining states expanded their Medicaid programs.

Improving the stability of health systems that people of color rely on, including rural hospitals and community health centers, is one way that closing the coverage gap would be a crucial step toward health equity in rural communities.

Rural Hospital Closures Affecting Communities of Color

Share of non-white population by county and sites of recent rural hospital closures

Notes: Ga. and S.C. are among the ten states with the most rural hospital closures since 2010; all but two (Mo. and Okla.) have refused to expand Medicaid (and those two expanded in 2021).

The median number of rural hospital beds is 25, according to UNC Sheps Center data from 2015, the latest available.

Source: CBPP analysis using data on rural hospital closures from the Cecil G. Sheps Center for Health Services Research, and county population information from American Community Survey 2019 5-year estimates.