New Trump Immigration Rule Could Devastate Rural Hospitals

According to a recent report, the Trump administration’s proposed change to what’s known as the “public charge” immigration rule would endanger $17 billion in Medicaid reimbursements for hospitals across the United States. This could threaten some rural hospitals, which are already facing an epidemic of closures, and leave many communities without a hospital within a 35-mile radius.

The rule proposed by the United States Citizenship and Immigration Services would require most immigrants seeking green cards to show that they have a middle-class income: specifically, more than 250 percent of the federal poverty line (about $62,750 for a family of four). Immigrants could also fail the test if they have received government benefits, including Medicaid and Medicare Part D, in the past or if officials feel they are likely to receive them at any point in the future. The test would also penalize use of the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) and housing assistance programs.

Researchers at the consulting firm Manatt found the proposed changes could drive disenrollment from Medicaid, even for people who are lawfully in the United States, eligible for coverage, and wouldn’t be subject to the public charge rule, because they fear running afoul of the new requirements. Similar fears are already pushing eligible immigrant families off SNAP, especially those in “mixed status” households that include lawful residents, citizens, and/or undocumented people.

Overall, the researchers estimate public charge could affect 13.2 million immigrants on Medicaid, including 7.6 million children, who consume nearly $70 billion in Medicaid and Children’s Health Insurance Program services annually.

When people begin to unenroll from Medicaid, the rise in uninsured people who still need health care will lead to fewer Medicaid reimbursements and a corresponding increase in uncompensated care costs. That will be particularly hard on rural hospitals, in part because rural communities rely more heavily on Medicaid coverage than their urban counterparts due to the lower number of other insurance options and high poverty rates.

While the majority of immigrants in the United States live in urban areas, they are making up an increasing share of rural communities. When rural hospitals experience even a relatively small drop in income from losing these patients, Manatt researcher April Grady notes that it “can have an outsized impact.”

Texas, California, and Nevada could see particularly acute chilling effects for their immigrant residents in both urban and rural areas if the public charge rule is approved, thanks to their large immigrant communities. Texas is already struggling with hospital closures, where changes to Medicaid policy, along with the state’s refusal to expand the program, have hit rural facilities hard.

When the sole hospital in a rural community closes, it forces patients to search further afield for care, a particular concern with obstetrical and emergency treatment. It also has a wider negative economic impact. “In rural communities,” said George Pink, Deputy Director of the NCRHRP, “the hospital is the largest or second-largest employer in the region. When that source of employment goes away, there are often ripple effects.” This can extend to companies considering relocation but reluctant to do business in an area that lacks a hospital or doesn’t provide sufficient hospital services, depriving rural regions of economic opportunities. Sharita Thomas, a research associate with the North Carolina Rural Health Research Program (NCRHRP), observed that there have been 90 rural hospital closures since 2010, many in the South, with more on the horizon. 68 percent of rural hospitals vulnerable to full closure are Critical Access Hospitals, which are facilities that are at least 35 miles away from other hospitals, maintain 24/7 emergency care, and meet several other criteria to receive unique benefits designed to make them more financially stable, including cost-based Medicare and in some cases Medicaid reimbursement.

Even if hospitals facing budget constraints don’t close, they could start cutting programs, with labor and delivery a frequent early target. When cuts fail to achieve the desired goal and get more drastic, a floundering hospital may ponder a merger with another health care entity. Hospital mergers in urban and rural areas alike are rapidly accelerating, with 102 in 2016 alone and a comparable number in 2017. Many of the hospital chains gobbling up smaller competitors are Christian, with the Catholic hospital system in particular expanding rapidly and cutting off access to reproductive health services in the process.

Public charge could have another unintended consequence on rural hospitals, where physicians from immigrant backgrounds make up an important component of health care access. Many rural communities are counting on immigrants to meet health care provider shortages, offering incentives to those willing to work in underserved communities. Physicians have already warned that the executive order restricting entry from majority-Muslim countries is detrimental to health care access in the U.S. and this rule could be another deterrent.

Determining the impact of public charge on rural hospitals “really is a bit of a numbers game,” said Grady, but it’s a game that the federal government has been unwilling to play. She added that while the proposed rule hints at issues like people being afraid to seek emergency care and mixed-status households withdrawing from benefits, it declined to provide estimated fiscal and social impacts.

“There’s administration hurdles that are not fully explored in the proposed rule,” she said.