One aspect of Obamacare was the expansion of Medicaid in states that agreed to accept this expansion. Some states, such as my adopted state of Florida, declined the expansion. This provided researchers with an opportunity to study the effects of accepting or rejecting the expansion.
One study, conducted by researchers at the University of Colorado Anschutz Medical Campus, found that hospitals in states that expanded Medicaid were six times less likely to close than hospitals in states that declined the expansion. Hospitals in rural areas, which tend to rely more heavily on Medicaid and generally have less income relative to urban hospitals, were the hardest hit.
These results are hardly surprising. Hospitals are required by the 1986 Emergency Medial Treatment and Labor Act(EMTALA) “to ensure public access to emergency services regardless of ability to pay.” As such, unlike other businesses, they cannot turn away people who cannot pay for the services they provide. While Medicaid payments to hospitals are notoriously low, some payment is better than no payment. Because of this, hospitals in states that expanded Medicaid are less likely to need to provide unpaid services and this makes it more likely that they can remain profitable and stay open.
It is, of course, reasonable to consider alternative explanations. After all, mere correlation is not causation and it would be fallacious post hoc reasoning (to infer that because A happened after B, B must have caused A) to simply conclude that Medicaid is the cause. The states that expanded Medicaid might differ in other ways from states that did not—for example, they might have more robust economies or larger percentages of privately ensured patients. That said, the study does seem to support the connection between Medicaid and hospitals remaining open.
One moral and practical concern about hospital closings is that people who need care will be less able to receive it. While it would be hyperbole to claim that hospital closings would leave people in the area with no care, it does reduce their access to care. This is especially of concern in rural areas that already have few hospitals. While people can, of course, travel to get medical care, increased travel times would reduce the likelihood that people will seek care and would also impact outcomes. For example, rapid treatment is critical for stroke victims. Even if patients still have access to a local hospital, hospital closures will increase the time patients need to wait for treatment and this can have a negative impact on medical outcomes.
While health care does not operate within a free market of informed consumers and competitive prices, the closing of hospitals can result in increased costs for medical care. After all, the scarcer a commodity is, the more people tend to charge for it. Since medical care is already extremely expensive, an increase in costs would be even more of a burden on patients, especially those that are not affluent.
Because of the negative impact of not expanding Medicaid, states that have not expanded it should do so. This will decrease hospital closures and thus have a generally positive impact. From a moral standpoint, this would be the right thing to do—assuming that the state has an obligation to the well-being of its citizens.
One obvious counter to this view is to argue against such an obligation. This position is often taken by conservatives who favor limited government and oppose entitlements. There is also the obvious market-based argument here (although medical care is clearly not operating as a free market). The gist of this argument is that medical services are a business and that if a business cannot stay open on its own, then the state has no obligation to intervene. As such, Medicaid should not be expanded to address this problem: if the hospitals cannot stay open on their own, then the market should close them.
The easy and obvious reply to this is that, as noted above, the law requires hospitals to provide medical services even when patients cannot pay. By imposing this restriction, the state has taken a strong role in the market. Since the state imposes this requirement on hospitals, it seems reasonable that the state should take steps to offset this burden—in this case, by expanding Medicaid.
Alternatively, EMTALA could be repealed and hospitals could operate like other businesses in terms of being able to refuse services for those who cannot pay. In this case, there would not be a need to expand Medicaid to assist hospitals in remaining open—they would not lose money providing services to those who cannot pay. But, there would be a high cost in terms of sickness and death among those unable to afford medical care. There is also the possibility that even without the burden of EMTALA hospitals would still be more likely to close without a Medicaid expansion. After all, while hospitals would not be losing money on patients who cannot pay, they would also not have the financial benefit of the Medicaid expansion. As such, their closure rate would presumably be higher than hospitals in states that have expanded Medicaid.