When a ballot measure expanding Oklahoma’s Medicaid program to include many able-bodied adults narrowly passed in 2020, supporters claimed expansion would provide long-term financial stability for rural hospitals.

But now two reports in less than one year have warned a wide swath of Oklahoma rural hospitals could soon close, and a third report has identified Medicaid expansion as a primary cause of those likely closures.

The reason is simple: Medicaid doesn’t cover the cost of treatment. Therefore, the more patients put on Medicaid, the more money hospitals lose.

“The more people that are shifted from private insurance to Medicaid, the higher the Medicaid shortfalls, and the lower hospital profits,” wrote Michael Greibrok and Hayden Dublois in a new study from the Foundation for Government Accountability (FGA). “Hospitals are learning that you cannot become solvent by providing more and more services below cost. This is a surefire way to bankruptcy, not solvency.”

Greibrok, senior research fellow at FGA, and Dublois, data and analytics director for FGA, reviewed the federal filings of more than 4,000 hospitals nationwide. In 2013, the final year before Medicaid expansion was implemented under the federal Affordable Care Act (“Obamacare”), the FGA report showed that hospitals in states that embraced expansion reported just over $10 billion in losses due to Medicaid.

But by 2021, the most recent year for which public data is available, those Medicaid losses had ballooned to $22.3 billion at those states’ hospitals, an increase of 115 percent.

In contrast, hospitals in non-expansion states (of which there are still 10 today) saw their Medicaid shortfalls increase by only 6 percent.

The picture doesn’t get better when looking at overall finances.

“In terms of total hospital profits, expansion states and non-expansion states are moving in opposite directions,” the FGA report stated.

The report found that hospital profits in non-expansion states are now higher than profits in states that expanded Medicaid to include able-bodied adults.

In expansion states, hospitals’ average profit margin fell from 6.2 percent in 2013 to just 1.4 percent in 2021.

But in non-expansion states hospital profits increased from 4.9 percent in 2013 to 7 percent in 2021, meaning hospital profits in states that did not expand Medicaid are now “five times that of hospitals in expansion states” on average, the report noted.