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By Sean Gorman July 25, 2014

Saslaw says 40 percent of rural hospitals will close in states that don't expand Medicaid

State Sen. Richard Saslaw says rural hospitals are imperiled in Virginia and other states that don’t expand their Medicaid programs.

"We all get that magazine, `Governing,’ and they’ve estimated that in the states that don’t expand Medicaid, a minimum, they said of 40 percent of rural hospitals will close in those states..." Saslaw, D-Fairfax, said during a recent radio interview on the John Fredericks Show.

We hadn’t heard of such a dire estimate and we wondered whether Saslaw was correct.

Let’s start with some background. Saslaw, the Senate minority leader, strongly backs expanding eligibility in the state’s Medicaid program to as many as 400,000 additional low-income and disabled Virginians. Under the Affordable Care Act, also called Obamacare, the federal government would always pay at least 90 percent of the cost. General Assembly Republicans have blocked the expansion, however, saying Washington can’t be trusted to pay its promised share.

Obamacare, when it was approved in 2010, required all states to extend Medicaid eligibility to households earning up to 133 percent of the federal poverty line. The idea was to make sure that people who couldn’t afford health insurance could gain coverage either through broadened Medicaid programs or subsidized policies bought on by newly-created health exchanges.

Because more people would have coverage, the ACA called for the gradual reduction of federal payments -- Disproportionate Share Hospital , or DSH -- to hospitals that treat large numbers uninsured patients.

But the trade-off was upset by the U.S. Supreme Court’s 2012 ruling that allowed each state to decide whether to expand Medicaid. Twenty-six states and the District of Columbia have opted in. Twenty-four states, including Virginia, have declined to broaden their programs.

The DSH payments, however, are still scheduled to be deeply cut. That means states like Virginia that refuse to accept federal money to expand Medicaid also will be losing federal dollars to help compensate hospitals for treating patients who can’t afford health insurance. The hospitals, in other words, will lose revenue.

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Saslaw told us his comments were based on an article this April in Governing, a national magazine directed towards elected officials and bureaucrats.

But contrary to Saslaw’s assertion, the story didn’t estimate that 40 percent of the rural hospitals would shut down in states that don’t expand Medicaid. What it said is that more than 40 percent of the rural hospitals nationwide are "operating in the red," according to the National Rural Health Association, and those located in states that don’t broaden Medicaid may see their financial  problems worsen.

We asked the association if it’s made any predictions on the percentage of rural hospitals that will close in states that don’t expand Medicaid.

"We don’t have an estimate or a guess on that," said Lindsey Corey, the group’s communications and marketing director.

During a subsequent second conversation we had with Saslaw, he acknowledged he "misread" the article.

Our ruling

Saslaw says Governing magazine has estimated that 40 percent of rural hospitals will close in states that don’t expand their Medicaid rolls.

The magazine article didn’t make that dire prediction and neither did the health organization that’s quoted in the story. What they said was that 40 percent of rural hospitals are running in the red and those located in states that don’t broaden Medicaid eligibility may see their problems exacerbated.

No doubt, many rural hospitals face significant challenges. But Salsaw, who admits he erred,  misstated the peril to his advantage in arguing for Medicaid expansion. We rate his statement False.

Our Sources

Sen. Richard Saslaw’s interview on the John Fredericks Show, July 11, 2014.

Voicemail message from Sen. Richard Saslaw, July 21, 2014.

Interview with Richard Saslaw, July 24, 2014.

E-mail from Janet Muldoon, legislative assistant for Sen. Richard Saslaw, July 22, 2014.

National Rural Health Association, "Rural Hospitals closing at alarming rate," May 1, 2014.

Governing, "Rural Hospitals are on life support," April, 2014.

Governing, "Uncompensated care dropping fast in Medicaid expansion states," June 17, 2014.

Interview with Lindsey Corey, communications and marketing director at the National Rural Hospital Association, July 22, 2014.

Email from Lindsey Corey, July 23, 2014.

University of North Carolina’s Cecil G. Sheps Center for Health Services Research, "How does Medicaid expansion affect coverage of rural populations," July 2014.

Johnson City Press, "Wellmont to close Virginia Hospital, points to Obamacare, patient loss," Sept. 11, 2013.

Center for Healthcare Research and Transformation, "Medicaid and Medicare disproportionate share hospital programs," January 2014.

Congressional Research Service, "Medicaid disproportionate share hospital payments," Dec. 2, 2013.

Email from Jeremy Greenfield, director of advocacy at the Virginia Hospital and Healthcare Association, July 23, 2014.

Richmond Times-Dispatch, "High stakes for hospitals in Medicaid fight," April 19, 2014.


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Saslaw says 40 percent of rural hospitals will close in states that don't expand Medicaid

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