Access to high quality health care should be a top priority for Alabama’s state lawmakers. Over the past several decades, hospitals across the state have faced increased financial strain, with several notable closures and other healthcare providers facing serious financial issues, limiting the number of health care options available to Alabamians.
Rural Alabama has been hit the hardest by these closures, leaving residents with fewer local options and forcing them to make a choice between forgoing needed care or making long trips to receive it.
How can Alabama’s state government increase access to and make health care more affordable in rural Alabama?
Some would lead you to think that Medicaid expansion is the answer to all that ails Alabama’s rural health care system, arguing that the influx of federal dollars would put rural providers on more solid financial ground. However, there are numerous factors that must be considered.
First of all, while Medicaid expansion might provide increased coverage to residents of rural Alabama, it might do little to decrease the strain on health care providers in those areas. Yes, facilities could see an increase in payments, but Medicaid reimbursement rates “tend to be much lower” than Medicare and traditional insurance coverage provide. In other words, rural providers may have to increase staff sizes to keep up with increased demand created by Medicaid expansion, but it is unclear that Medicaid’s lower reimbursement rates would cover those increased costs.
Putting Medicaid expansion aside, there are demographic issues that make it more challenging to attract new healthcare providers to Alabama’s rural health care market as well as making it harder for existing providers to remain in operation. From 2010 to 2020 “Alabama’s rural counties lost up to 20% of their population”, creating major challenges for providers. Having more Alabamians covered by Medicaid won’t do anything to improve the bottom line of rural health care providers if the population in those areas continues to shrink.
Rather than expanding Medicaid, a better option to increase access to care and make that care more affordable is Certificate of Need (CON) reform. The state’s CON law requires certain healthcare providers to go through an application and approval process before new or expanded services can be offered. It also gives existing providers veto power to block new providers from entering the healthcare market. The CON approval process is often an expensive and time consuming process.
Alabama has one of the most restrictive CON requirements in the nation, with 47 individual requirements being regulated by the state Certificate of Need Review Board. State CON requirements stifle competition and healthcare innovation and can take a major toll on rural hospitals.
Evidence shows that CON regulations negatively impact rural communities the most. A study conducted by the Mercatus Center at George Washington University found that CON states have 30% fewer rural hospitals per 100,000 residents than non-CON regulated states and 14% fewer ambulatory surgical centers. CON states also spend more Medicaid dollars per patient in rural areas and have higher emergency room utilization levels.
Rural hospitals in CON states are also at a much greater risk of closure than in non-CON states. Data compiled by the University of North Carolina found that 191 rural hospitals have closed since 2005. None of those closures occurred in non-CON regulated states.
According to Mercatus, CON laws mean that “Americans living in rural areas find it harder to access care. They have to travel longer distances, wait longer for appointments, and pay more for care. Residents of rural states, on average, spend more and use more healthcare services in CON states compared to non-CON states.”
Beyond the costs and access to care, quality of care also suffers for Alabamians because of CON laws. A 2020 Alabama specific study found that if the state lifted its CON laws, post-surgery complications such as heart attacks, heart failure, and pneumonia would all decrease. Mortality rates and readmission rates would decrease as well.
During the 2024 regular session, there was an effort to reduce the burden of CON regulations that was specifically aimed at rural Alabama. Senate Bill 236 by Senator Larr Stutts would have eliminated the CON process for any new or expanded medical facility or health care service located in a rural area, which was defined as any area of the state located outside of a metropolitan statistical area. The bill received a public hearing in the Senate State Government Affairs Committee, but did not progress further.
While API feels that all state CON requirements should be repealed, Senate Bill 236 would have increased access to care and promoted health care innovation in areas of the state that need it the most. Lawmakers should continue to pursue this option as well as wider ranging CON reforms in 2025.
The key to improving healthcare outcomes in rural Alabama is unleashing competition and allowing a free-market healthcare system to prosper, not to become more dependent on the federal government through Medicaid expansion. Repealing Alabama’s CON laws would allow for increased health care modernization and grant providers the authority to offer cost-effective services that best meet the needs of citizens without compromising the quality of care.
It is possible that more federal intervention might provide financial stability to a limited number of rural hospitals in the short-term, but it is not a panacea to improve healthcare across the state, nor is it a long-term solution. Repealing the state’s CON requirements would go much further towards achieving that goal for all Alabamians.
