Our view: Ask candidates: How can Virginia save its rural hospitals?

Set aside, for a moment, talk of the entertaining debates among prospective nominees in next year’s presidential race. Virginians have a General Assembly election next month that could have life-or-death consequences in their communities.
Virginia’s hospitals are in a world of hurt — particularly in rural areas, where about half already were operating in the red in 2013 and the financial forecast is all gloom.

As in: The financial outlook for all Virginia hospitals is a steady decline — from 4.5 percent operating margins in 2014 into negative territory; possibly to minus 0.2 percent by 2022, one study found.

Who will save them from cutting services and perhaps, in rural areas, finally closing?

The state hospital association is looking to lawmakers in Washington and Richmond to stanch the bottom-line bleeding throughout Virginia’s health care systems “in the midst of an unprecedented transition.” Surely every politician’s constituents would like that; this is something voters and state candidates for the General Assembly can agree on.

You’d think. But think again. The threat to rural hospitals, in particular, came up this month when the leaders of the state Senate’s majority and minority parties debated whether voters ought to maintain Republicans’ razor-thin control of that chamber, or flip it to Democrats.

Majority Leader Tommy Norment and Minority Leader Richard Saslaw agreed on a couple of things: 1. Survival of rural hospitals will be a major concern in the next legislative session. 2. Lawmakers have no backup plan to replace billions of dollars that would flow to Virginia, and ease the stress, if the state would expand Medicaid.

Expansion, of course, is a key part of the Affordable Care Act, which the national GOP hopes still to unravel. But the ACA is the law and, despite continued opposition, is almost certain to remain so.

Without expansion, the harm in Virginia will go beyond the health of uninsured people to include the economies of rural communities where the local hospital is a major employer — and that will be felt in Richmond.

Check out the numbers. An August Focus report on the level of financial stress hospitals are facing, and its several intertwined causes, is posted on the Virginia Hospital and Healthcare Association website, vhha.com.

Here’s a tidbit on the economic stakes: Hospitals and health systems directly employ more than 115,000 people with a combined payroll of $8 billion. According to the Virginia Labor Market Index, direct and indirect health care-related jobs account for almost 950,000 of all Virginia jobs (or approximately 23 percent of the workforce) and an estimated $36 billion to the state economy.

The association rolled out a statewide public information campaign recently on the coming economic blow if nothing changes — taking care not to utter the words “Medicaid expansion” in advance of next year’s General Assembly. It’s an immediately polarizing topic. And while GOP refusal to accept the federal dollars is a source of financial stress for hospitals, it is not the only one.

Sequestration is a huge blow. That one’s on Congress. Medicare takes its deepest cuts from 2014 to 2022 by legislative actions. But Virginia’s General Assembly sets low-ball Medicaid reimbursement rates, now at 66 percent of the cost of hospital care — down from 79 percent in 2002.

The ACA further reduces Medicare payments in several ways, but hospitals that serve high percentages of uninsured patients and patients on Medicare and Medicaid are hit particularly hard. These Disproportionate Share Hospitals get extra funding by means of Medicare and Medicaid DSH (say “dish”) payments.

These are being phased down under Obamacare, which anticipated hospitals would partially offset the loss by having many new patients with health care coverage . . . through Medicaid expansion.

Federal law requires hospitals to treat all patients who show up in their emergency rooms, regardless of ability to pay. Hospitals run up hundreds of millions of dollars of costs each year in charity care and unpaid bills — and DSH hospitals run up a disproportionate share of them.

When the Supreme Court ruled that states could expand Medicaid if they wanted, but could not be compelled, it messed up a critical mechanism of the ACA — or bolstered states’ rights, if you prefer.

And it further politicized health care reform across the nation, with most Republican-controlled states opting out of the expansion.

Virginia’s Democratic governor and GOP-dominated House fought bitterly last year when for 104 days, Senate Democrats “held the budget hostage to try to get the House of Delegates to capitulate on one specific issue,” Norment declared during the Oct. 5 debate at Christopher Newport University — i.e., Medicaid expansion.

With the stalemate over expansion fresh in the public mind, Norment said, he was confident voters will want Republicans to keep control of the Virginia Senate. “The difference is governance. . . . We are going to continue to be fiscally responsible.”

Democrat Saslaw’s counterargument: “It is fiscally irresponsible to reject the money.” As he noted, Virginia taxpayers already have paid into the program and their hospitals need it.

Not mentioned: State Medicaid spending grew in all states, though at a slower pace, in FY 2015. But the rate of increase was higher in non-expansion states.

We believe Virginia voters do put a high value on responsible fiscal policy, as do we. But this begs a question: Is securing a GOP bulwark against expansion the fiscally responsible path? Or is it bowing to ideological purity at the risk, even the likelihood, of doing serious damage to rural economies?

That’s part of what is at stake. Whether Republicans’ Senate majority holds as a result of the Nov. 3 election or tips to Democrats might not make any difference, as Norment said, as long a Republican House remains rabidly opposed to the expansion.

But reason might break through. Hospitals are more than savers of lives and places of healing. They are huge economic drivers in their communities and in the state. Republicans from rural districts should be all about that.

Insuring the working poor isn’t a cure-all, but it would help. If not Medicaid expansion, what? Virginia Republicans have the floor.

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