UPPER DELAWARE RIVER VALLEY — As Congress prepares to finalize a budget that could strip $4 billion from the Pennsylvania share of the Medicaid program, health care officials and elected representatives throughout the Upper Delaware are raising the alarm about what that change could mean for rural care. 

The changes don’t just matter for those set to lose their insurance—an estimated 16 million nationwide. The cuts will also increase the financial strain on rural hospitals, already operating on slim or negative margins, causing them to shed services or to close entirely. 

The Pennsylvania Department of Health held a press conference at Wayne Memorial Hospital in Honesdale, PA, on Friday, June 27, highlighting the potential impacts the Medicaid changes could have on that hospital system. 

Wayne Memorial CEO James Pettinato said that the hospital has been working to increase the services that it offers. However, even with the hospital’s work, the area around it is still considered underserved, he said. 

“The proposed budget cuts would likely force us over time to reduce services and continue to leave the most vulnerable population of patients at greater risk for disastrous health outcomes,” said Pettinato. 

Across the river in Sullivan County, NY, Garnet Health announced cuts to some of its outpatient services on June 17. While the hospital has cut services repeatedly over the past couple of years, reflecting a struggling financial situation, it claimed this most recent cut to be partially due to the upcoming Medicaid changes. 

“Without question, the health care climate continues to be challenging, with no immediate sign of reprieve,” said Garnet Health CEO Jonathan Schiller. “And due to shrinking federal reimbursements, as well as additional anticipated federal cuts to the Medicaid program, we are faced once again with very difficult decisions.”

Who will lose out?

The changes to the Medicaid program will mean that people will lose their coverage, with different estimates circulating as to how many people would be affected.  

The Congressional Budget Office, a federal agency established to provide Congress with non-partisan analysis of potential legislation, published a review of the proposed Medicaid changes on June 4, analyzing the budget as it then existed in the House. 

Around 16 million people will lose their insurance by 2034 if all the proposals in the budget are adopted, according to the office’s analysis. (See sidebar for a breakdown of the specific policies and the numbers reviewed.)

Speaking at Wayne Memorial on June 27, Pennsylvania Secretary of Health Dr. Debra Bogan estimated that, of the 3,000,000 Pennsylvanians covered by Medicaid, 300,000—10 percent—will lose their coverage under Congress’ proposals. 

In New York, a May report from the Fiscal Policy Institute estimated that around 37,500 people could lose health insurance coverage throughout the New York 19th Congressional District, which includes Sullivan County. The report estimated that 1.5 million New Yorkers could lose health insurance coverage statewide. 

A further 270,000 Pennsylvanians who have individual insurance through the state’s health insurance marketplace, Pennie, could additionally lose their coverage, said Pennsylvania Insurance Commissioner Michael Humphreys. 

Much of that impact comes from the expiration of extended insurance tax credits, which the current budget does not proposed to extend. Humphreys estimated that, due to the expiring tax credits, 90 percent of Pennie enrollees would pay 82 percent higher premiums on average, with some enrollees paying even more. 

By the numbers

$4 billion: The amount the latest proposals would strip from the Medicaid budget. 

16 million: The number of people nationwide estimated to lose insurance coverage by 2034. 

300,000: The number of Pennsylvanians estimated to lose Medicaid coverage. 

1.5 million: The number of New Yorkers estimated to lose Medicaid coverage. 

82%: The average increase to insurance premiums through Pennsylvania’s individual insurance marketplace. 

31%: The estimated increase to insurance premiums for couples throughout the Hudson Valley.

In June, New York Gov. Kathy Hochul’s office estimated that the expiration of the enhanced tax credits will increase average monthly premiums throughout the Hudson Valley by an average of $206 monthly for a couple, a 31 percent increase. 

These aren’t just abstract numbers. Sara Goulet, senior advisor to the Pennsylvania Secretary of Human Services, said that the services provided under Medicaid help save lives, with hundreds of thousands of Pennsylvanians receiving treatment for substance use disorder, diabetes treatment and heart failure care. 

“This is really essential care, and it’s provided by the dedicated nurses doctors and other providers here at Wayne Memorial and hospitals, health centers and doctors offices around the commonwealth,” she said. 

Pettinato said that Wayne Memorial is one of the few rural hospitals in the state still delivering babies, with the hospital seeing around 475 births a year. The majority of these births are covered by Medical Assistance (Medicaid), and nearly half of them involve high-risk patients, he said. 

“Many of these babies are alive here today because of the expertise of our team and the critical access to the services available in the community,” he said. 

PA Department of Health Secretary Debra Bogen speaks on the impact of Medicaid cuts to Pennsylvania's rural health care system on June 27.

What are the ripple effects?

It’s not just the impact to individuals that has health care officials concerned. It’s also the knock-on effects that will result to the stability of the health care system. 

Rural hospitals are already in a precarious financial situation, said Pettinato, with many of them losing money rather than making it. “These cuts that are being proposed will significantly strain what are already negative operating margins,” he said. 

Rural hospitals in particularly rely on Medicaid funding as a source of income, because they serve vulnerable populations that rely on Medicaid for their health care coverage. This leaves them at an increased level of risk from changes or cuts to Medicaid. 

The Pennsylvania Health Access Network released a report at the start of June identifying 47 hospitals at risk of closure due to the Medicaid changes, representing one fourth of all hospitals in Pennsylvania. The selection criteria included high Medicaid enrollment in the hospital’s home county, the hospital’s financial performance and the amount of public funds used to subsidize their operations. 

Wayne Memorial did not make the list. Nor did Barnes-Kasson, a Susquehanna County hospital that recently partnered with Wayne Memorial. However, another Susquehanna hospital—Endless Mountains—did make the list, as well as other hospitals throughout Northeast Pennsylvania. 

The cuts to Medicaid and the other changes that will lead to a loss of insurance coverage will impact rural health care more indirectly as well. 

“When people don’t have access to health insurance, they’re forced to forgo preventative care and rely on emergency care,” said Bogan. “This in turn leads to not only worse health outcomes, but it also increases uncompensated health care services.”

Rural hospitals don’t have the ability to absorb the costs of an increase in uncompensated care, said Humphreys. That’s a cost they’ll have to pass on to paying customers and insurance providers, raising costs for everyone who relies on health care, or leading to hospital closures. 

“And when rural hospitals close, it’s not just a health care crisis,” said Humphreys. “It’s a jobs crisis, it’s an EMS delay crisis, and it’s a public health emergency in the making.”

The economic impact hospitals have on rural communities means that any damage to their finances hurts the economic health of the community as a whole, according to Pettinato. He said that rural hospitals like Wayne Memorial are the major employers in their communities. 

“Our health system and hospitals create a ripple effect of over $80 million annually, strengthening the local economy while we might all operate in a negative operating margin, only bailed out by philanthropy and bailed out by investments,” he said. 

Wayne Memorial CEO Jim Pettinato speaks on the impact of Medicaid cuts during a June 27 press conference.

What can be done?

State and local governments have a part to play in mitigating the effects of the changes. 

During New York’s budget process, state legislators agreed to give Gov. Kathy Hochul the ability to make mid-year budget cuts if the state stands to lose at least $2 billion from the federal changes, according to reporting from New York Focus. However, Hochul maintained that the state can’t fully back-fill the federal cuts. 

Neither can Pennsylvania, according to Bogan. She highlighted parts of Gov. Josh Shapiro’s proposed budget that support the state’s medical system, including a boost to the state’s student loan repayment program for primary care providers. However, the federal government needs to do its part too, and “drastically cutting the Medicaid program is very much the opposite of doing its part,” she said. 

Wayne Memorial received significant support as well at the county government level, according to Pettinato. He said that the “building and services that are here are large in part due to the support that we get from the county and the community. 

“We must work together for the good of everyone in our community to keep this health care facility here and to keep all health care facilities healthy,” said Wayne County Commissioner Brian Smith. “Changes can be made [to Medicaid], but they needed to be made surgically, a little bit at a time.”

Bogan urged people to contact their federal representatives and to tell them not to vote to strip away coverage. 

“We’re here today to inform our federally elected officials that these proposed cuts and changes would be detrimental to Pennsylvanians—all Pennsylvanians, but especially the health care systems in rural Pennsylvania and rural Pennsylvanians,” she said.

Editor's note: This article as initially posted contained an error in the figures for the federal Medicaid changes.  The federal changes will strip $4 billion from the Pennsylvania share of the Medicaid program; the national figure sits at almost $1 trillion, according to reporting from The Hill.