Rural areas in states that implemented Medicaid expansion to lower income adults experienced larger gains in coverage.

By Julia Foutz, Samantha Artiga, and Rachel Garfield with Kaiser Family Foundation

People in rural areas face unique challenges in healthcare coverage and access, including low density of providers and longer travel times to care, limited access to employer-sponsored coverage, and greater healthcare needs due to older age and lower income. Medicaid plays an important role in helping to address these challenges.

Where is Rural America and Who Lives There?

The nearly 20 percent of the non-elderly population, or 52 million people, who live in the most rural counties of America are spread across almost 2,500 counties that are heavily concentrated in the South and Midwest. In contrast, the 20 percent of the non-elderly population (or 55 million people) who live in the most urban counties of America are spread across fewer than 70 counties that are heavily concentrated in the Northeast.

People living in rural areas are more likely to be older, white and have lower levels of education compared to people living in other areas. Like other areas of the U.S., nearly nine in ten people living in rural areas have at least a high school diploma or GED. However, fewer than two in ten people in rural areas have a bachelor’s degree or higher, compared to nearly four in ten people in urban areas and three and ten people living in other areas of the U.S.

People living in rural areas are less likely to be in the labor force, more likely to have a disability and more likely to be low-income than people living in other areas. Reflecting their lower employment rate, non-elderly individuals living in rural areas are more likely than those in other areas to be low-income (below 200 percent of the federal poverty level or $40,320 per year for a family of three in 2017).

Rural populations face longstanding and significant disparities in their health and access to healthcare. Previous research has shown that rural residents are more likely to report poorer physical and mental health and have higher rates of cigarette smoking, obesity and physical inactivity compared to their urban counterparts. In addition, people living in rural areas face significant barriers to accessing care, including provider shortages, recent closures of rural hospitals, and high travel distances to providers.

What role does Medicaid play in rural America?

Medicaid plays a central role helping to fill gaps in private coverage in rural areas. Private insurance accounts for the largest share of health coverage among individuals in rural areas. However, non-elderly individuals in rural areas have a lower rate of private coverage compared to those in urban and other areas, reflecting greater employment in jobs that do not offer employer-sponsored health insurance and the lower labor force participation rate in rural areas. Medicaid helps fill this gap in private coverage, covering nearly one in four (24 percent) non-elderly individuals in rural areas, compared to 22 percent in urban areas and 21 percent in other areas. However, Medicaid coverage does not fully offset the gap in private coverage. As such, rural areas have a slightly higher non-elderly uninsured rate (12 percent) compared to urban (11 percent) and other areas (10 percent).

Within states, Medicaid generally plays a larger role in rural areas of the state compared to other areas. Medicaid coverage rates are higher in rural areas than in urban areas in 12 of the 19 states with both rural and urban areas. Similarly, rural areas have a higher Medicaid coverage rate than other areas in 41 of the 43 states with both rural and other areas. In some states, the Medicaid coverage rate in rural areas is much higher than other areas.

The share of people living in rural areas who are covered by Medicaid has grown under the ACA, corresponding with reductions in the uninsured rate. Rural areas experienced growth in Medicaid and private coverage that was similar to urban and other areas. In rural areas, the share of people with Medicaid and private coverage increased from 21 percent to 24 percent and 58 percent to 61 percent between 2013 and 2015, resulting in a decrease in the uninsured rate from 17 percent to 12 percent.

Rural areas in states that implemented the ACA Medicaid expansion to low-income adults experienced larger gains in coverage than those in non-expansion states. Prior to the ACA coverage expansion, which was implemented in 2014, rural areas in Medicaid expansion and non-expansion states had similar rates of Medicaid coverage.

However, rural areas in non-expansion states had a lower rate of private coverage, which contributed to a higher uninsured rate for rural areas in non-expansion states. In rural areas, the Medicaid coverage rate in expansion states increased from 21 to 26 percent between 2013 and 2015, while it rose just one percentage point, from 20 to 21 percent, in non-expansion states.

Reflecting the larger gains in Medicaid coverage in expansion states, the uninsured rate in rural areas within expansion states fell by nearly half from 16 percent to 9 percent. This reduction was nearly twice as large as the reduction in rural areas of non-expansion states. As a result, as of 2015, non-elderly individuals in rural areas within non-expansion states were nearly twice as likely to be uninsured as those within expansion states (15 vs. nine percent).

Looking Ahead

These data illustrate that Medicaid plays a particularly important role in the most rural communities within our nation. This analysis shows that Medicaid helps fill gaps in private coverage within rural areas, helping to reduce disparities in coverage between rural areas and the rest of the nation.

Medicaid coverage has grown in rural areas under the ACA, helping to reduce uninsured rates. However, states that expanded Medicaid experienced larger coverage gains than non-expansion states, leaving individuals in rural areas in non-expansion states nearly twice as likely to be uninsured as those in expansion states.

Given the larger role Medicaid plays for individuals in rural areas compared to other areas, individuals in these areas would likely be disproportionately impacted by coverage losses as well as reduced benefits and increased premiums and cost sharing.

Further, analysis shows that high poverty states and states in the South, which include many rural areas, would be disproportionately impacted by reductions in federal Medicaid funds and face the highest increases in state spending to maintain coverage amid federal reductions. Reductions in Medicaid coverage would also increase demands on safety net providers, including community health centers and public hospitals. At the same time, the loss of federal Medicaid revenues would increase fiscal strains on these providers who already face a range of challenges that have contributed to increases in closures among rural hospitals in recent years.

-Julia Foutz, Samantha Artiga and Rachel Garfield, The Role of Medicaid in Rural America, The Henry J. Kaiser Family Foundation, April 25, 2017, http://kff.org/report-section/the-role-of-medicaid-in-rural-america-issue-brief/.