In the four years since Arkansas chose to expand Medicaid under the Affordable Care Act, Harris Medical Center in Newport has seen its “bad debt” — bills left unpaid by patients — cut in half. Eight percent of the 133-bed hospital’s patients fell into the bad debt category in 2013, the year before Arkansas created the hybrid Medicaid expansion program known as the private option (later rebranded by Governor Hutchinson as “Arkansas Works”). Today, that figure is 4 percent, according to Harris Medical Center CEO Darrin Caldwell.
The reduction in the hospital’s share of uninsured patients has been critical for its finances. “The [Medicaid] expansion was very timely for most hospitals, smaller hospitals in particular,” Caldwell said. “Most bad debt has been cut in half across the state. It was even more timely for smaller hospitals in the Delta region, where we have a tendency to have a higher Medicaid percentage.” Newport, a town of about 7,800 people on the White River, is the county seat of Jackson County, which has one of the highest poverty rates in Arkansas.
Today, roughly 300,000 Arkansans are insured through expanded Medicaid. The percentage of uninsured adults in the state fell from 22.5 percent in 2013 to 10.2 percent in 2016, according to Gallup polling — the second-largest decline in the nation, after Kentucky. Now the ACA is in jeopardy, with U.S. Senate Republicans forwarding legislation that would both undo the Medicaid expansion (which covers low-income adults) and reduce spending on the traditional Medicaid program (which covers children, the disabled, the elderly and other vulnerable populations). The Medicaid cuts contained in the Senate’s Better Care Reconciliation Act would amount to around $772 billion over the next decade, according to a June estimate by the Congressional Budget Office in June. The reduction would become even more dramatic after 2026, when a more conservative funding formula for traditional Medicaid would be applied. By 2036, Medicaid spending would be 35 percent lower under the Senate plan than it would be in that year under current law, according to the CBO.
The Senate bill would also rework the ACA’s subsidies for individual insurance policies, end the insurance mandate for individuals, and allow states more latitude in determining what benefits must be included in private insurance policies. After the legislation failed to garner sufficient support in June, Republican leadership unveiled a revised version Thursday. The revamped BCRA would preserve certain taxes on high-income households (which the earlier version proposed to end) and further deregulate private insurance plans, among other changes.
The Medicaid cuts, however, remain at the center of the revised Senate bill. In states like Arkansas, where over 30 percent of the population relies on either traditional Medicaid or expanded Medicaid, those proposed cuts would have the biggest impact on patients, providers and hospitals.
“When you start thinking in terms of one in three — I mean, one in three?” Caldwell said. “That’s obviously a number that can’t just be swept under the rug. … This is greater than a fringe. This is the heart of the issue.”
In small towns such as Newport, the figures are even higher. A Georgetown University study published in June found 61 percent of children in Arkansas’s rural counties are covered by ARKids or another form of Medicaid. Another recent Georgetown paper found 18 percent of Arkansas seniors in rural counties are covered by Medicaid. (Many seniors on Medicare also receive Medicaid, which covers the cost of long-term care in nursing homes or other settings.)
Under the Senate bill, funding for traditional Medicaid populations (such as ARKids and seniors) would be scaled back beginning in the mid-2020s with the introduction of per capita funding caps. With less money to spend, states would likely cut benefits, cut program eligibility or both. Meanwhile, the enhanced federal funding that has enabled expanded Medicaid would begin to disappear in 2021, meaning the 300,000 low-income Arkansans who have gained coverage in recent years would lose it soon thereafter.
“By making [insurance] available, we gave those people a greater opportunity to live a healthier lifestyle or take care of chronic conditions or acute conditions more readily,” Caldwell said. “We had people for a generation that didn’t have health care. Now they’ve had it for a few years, and you’re asking to take it away from them again. That’s a pretty cruel trick that you’re playing on people.”
In Batesville, about 30 miles upstream from Newport, White River Health System CEO Gary Bebow expressed similar concerns. “Medicaid expansion had a remarkable reduction [on uncompensated care],” he said. “It went from around 7 percent of our patients to around 4 percent … So that was very beneficial — not only to us but also to those patients.”
Bebow said that cutting off health insurance for hundreds of thousands of Arkansans could have dire consequences. “We’ve been there before,” he said. “They’re late in coming into health care providers, and minor illnesses become major illnesses, and things that should have been taken care of through prevention aren’t taken care of.”
White River Health System operates a hospital in Batesville (pop. 10,700) and another in Mountain View (pop. 2,800), but its service area spans several counties in mountainous North-Central Arkansas and includes dozens of small towns and remote communities. “We have eight rural health clinics and manage eight senior health centers, so we have a very large outreach system,” Bebow said.
“We have a population of 75,000 to 100,000 people that we view as within our service area. … We’re the only primary health provider for many, many miles. Whether it’s in Strawberry or Tuckerman or Pleasant Plains or Drasco, we have some presence there, so people in those immediate areas have access to nurse practitioners and physicians.”
Bebow said White River Health System is “very heavily dependent on governmental funding,” with almost 75 percent of its revenue paid by Medicare or Medicaid. “Rural hospitals are more dependent on Medicaid and Medicare than the metropolitan areas,” he said.
Might the proposed cuts to Medicaid force the closure of rural clinics? “I don’t want to go there at this time,” Bebow answered. “If reimbursement is dramatically reduced, we look at the system as a whole and look at where we have to make cuts, and all the options would be on the table.”
Nonetheless, it is certain that more uninsured people would lead to a resurgence of bad debt for rural hospitals. “It’s kind of a blood-out-of-a-turnip issue,” Caldwell said. “These are the working poor. You can’t expect those who struggle to pay their bills at 100 percent of poverty to also accommodate their health care bills.” Caldwell said Harris Medical Center, like many smaller hospitals, operates on a negative profit margin and relies on sales tax revenue and charitable foundations to stay afloat. The hospital is part of Unity Health, which also operates White County Medical Center in Searcy.
“You increase your uncompensated care again, you cut into whatever profit margin now exists. You begin to take a harder look at services that are not revenue generators, obviously. … We do a lot of outreach and funding for programs throughout the state and throughout the county, and nonessential expenses will be looked at more tightly or removed altogether,” Caldwell said.
When asked whether deep cuts to Medicaid could pose an existential threat to some small Arkansas hospitals, Caldwell replied, “It would not be inappropriate to say that if an organization is already losing money and you cut another revenue source, it does not bode well for the future.”
Though smaller hospitals may be at greatest risk if Congress cuts Medicaid, larger institutions are also concerned. Chris Barber, the CEO of St. Bernards Medical Center in Jonesboro, said that the health care bill passed by House Republicans in May would cost his hospital $90 million through 2026 because of Medicaid cuts. St. Bernards, a 438-bed hospital, relies on Medicare and Medicaid for 60 to 65 percent of its revenue. (Barber did not have an estimate for the projected impact of the Senate bill because its details remain under negotiation.)
“That $90 million has to come from somewhere,” Barber said.
The Medicaid expansion has brought significant benefits over the past several years, Barber said. “It’s provided some resources to be innovative in primary care [and] a variety of services in caring for distinct populations with chronic diseases. It’s allowed us to do facility replacements and enhancements: a $140 million new bed tower, intensive care, surgical suites, a new cancer center, heart care … .That’s major progress for us.” The new construction should be complete in 18 to 20 months.
“[Medicaid expansion] certainly has been a great benefit for us here — not only to the organization, but, in our opinion, to the community as a whole, with new primary care, new specialty clinics, new outreach clinics. We have a new ambulatory care facility in conjunction with the hospital in Paragould, a primary care clinic in Piggott, primary care in Newport with a cardiology APN. … We’ve added a clinic in Lepanto … It’s allowed us to do a lot of things with providers.
Barber said he recognizes that some changes need to occur with the current law, but would urge Congress to make coverage a priority. “We feel that a repeal and replace bill must not make those proposed cuts in the Medicaid program,” he said.
Arkansas Senators Tom Cotton and John Boozman, both Republicans, did not respond to requests for comment. Neither senator has taken a public position on the Better Care Reconciliation Act, although Cotton was a member of the working group that drafted the original bill.
This reporting is courtesy of the Arkansas Nonprofit News Network, an independent, nonpartisan news project dedicated to producing journalism that matters to Arkansans.