By Liz Carey for The Daily Yonder.
Broadcast version by Mark Richardson for Minnesota News Connection for the Public News Service/Daily Yonder Collaboration
When rural patients incur medical bills they can’t pay, the impact of the debt reaches far beyond their own personal pocketbooks, a new study has found.
Medical debt also impacts the hospitals that can’t collect on the debt and the communities they serve, according to a research brief from the Rural Health Research Center at the University of Minnesota. Although medical debt is something all communities have, it hits rural communities harder, Carrie Henning-Smith, co-director for the center, said.
Researchers interviewed rural hospital administrators in seven states – Arkansas, California, Illinois, Texas, Vermont, Washington and West Virginia – to look at the implications of medical debt on rural communities at large.
“We know how widespread medical debt is,” Henning-Smith said in an interview with the Daily Yonder. “We weren’t particularly surprised by anything we heard, but I think one thing that stands out to me is that this is not just an issue of healthcare facilities passing on big bills to patients and then patients shouldering that burden.”
“This is really an issue that impacts individual patients, whole communities, and healthcare facilities, and I think smaller rural facilities that have a more tenuous bottom line are some of the most impacted,” she said.
Research indicates that about 44% of all U.S. adults are affected by medical debt, and that $88 billion in outstanding medical bills is currently in collections across the country. Researchers found the debts impact a rural hospital’s ability to continue paying their employees. With fragile bottom lines, rural hospitals are less likely to absorb the debt, respondents said.
A respondent from a Midwestern state said to the researchers, “One of the statistics that I think is really relevant is that we are about a $150 million organization… and 65% of those dollars go back in the form of compensation and benefits to our employees. So when we have medical debt that becomes excessive and we’re struggling to collect on the work that we do, it impacts our ability to employ [providers] and to serve our patients.”
With less revenue coming in, most respondents said, they are less likely to invest in equipment upgrades and their facilities, as well as less likely to hire more staff. Additionally, respondents said it’s harder to collect on that debt.
“It’s a non-recourse issue. We can’t go back and take back what we’ve done,” a Southern state administrator told researchers. “You can’t repossess anything medical like you can with a car or a home or anything like that when there’s financial troubles. We end up really just getting unpaid, mostly.”
Researchers found that much of the blame for the debt issue is not solely because of patients who are underinsured. In many cases, insurance companies and other payers – including Medicare, Medicaid and Medicare Advantage – are not covering the cost of care that the hospitals provide.
“They need to have their cost recouped for the care that they provide,” Henning-Smith said, “and when they have patients who are uninsured or underinsured or when they are dealing with insurance companies and payers that are not providing a sufficient amount to pay for the cost of the care, then the facility suffers and the patients and community suffer too.”
“It’s clear that our payer system is broken and that we have people whose care is not compensated at all or not at the rate that it needs to be to keep these facilities financially thriving,” she said.
Even if a patient is insured, some hospital administrators surveyed pointed out that underinsurance can create problems for patients and hospitals as well. High deductibles and plans with limited coverage options shift the responsibility for payment from the insurance company to the patient.
An administrator from the Midwest told the researchers, “Even the people who have the ability to pay, when you have more things like a high deductible health plan, no matter what your income is, it’s not easy for very many people if you have a $5,000 deductible. When that bill comes, that’s a difficult thing.”
Alan Morgan, CEO of the National Rural Health Association, said when rural hospitals don’t get paid, the impact is far reaching. Hospitals are typically among the largest employers in rural communities, and if a hospital fails because it can’t pay its bills, the whole community suffers.
“We’re in the midst of a hospital closure crisis and declining points of access to care in rural communities and it is because of bad debt, period,” Morgan said in an interview with the Daily Yonder. “When a hospital has to find ways to write off bad debt… for a lot of these rural hospitals, they’re operating on the margin and carrying large amounts of debt and uncompensated care that sometimes drives them to closure.”
When hospitals close due to financial problems, the economic hit on the community is multi-faceted, he said. The lost jobs not only reduce tax revenue coming into the community, but also impact the amount of consumer dollars being spent in the community. It means less income for businesses indirectly linked to the hospital, like flower shops, he said. And once the hospital closes, getting new families and businesses to move there becomes more difficult.
Fixing the issue will mean reforming how rural hospitals are reimbursed, Henning-Smith said.
“The message needs to continue to be about payment reform and understanding that medical debt is a widespread issue that’s not going away, but it’s not an individual issue and it’s not a matter of personal and individual responsibility,” she said. “It’s a community and a collective and a societal issue that if we don’t address, it’s not going to only impact the health and access to care of individuals, but it’s also going to impact availability of care in rural communities and places that need that care the most.”
Liz Carey wrote this article for The Daily Yonder.
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By Claire Carlson and Lane Wendell Fischer for The Daily Yonder.
Broadcast version by Isobel Charle for Washington News Service for the Public News Service/Daily Yonder Collaboration
When students in rural Trinity County, California, gaze out their classroom windows, they see the tree-filled landscape of Shasta-Trinity National Forest, which spans more than 2 million acres in the northeast corner of the state.
The expansive forest might inspire dreams of outdoor adventure for locals, but for Trinity County and other rural forest communities across the U.S., it also represents a fraught cycle of inadequate public school funding.
That’s because these schools rely on the Secure Rural Schools and Communities Act (SRS), a federal program that allocates money to counties that overlap National Forest land.
Because public land cannot be used or taxed for local interests, the SRS program offsets this loss of local revenue by allocating federal funds to support essential community infrastructure like roads and schools. SRS requires regular reauthorization, typically every three years and is often accompanied by reductions in funding.
The law temporarily expired in 2016 and rural school districts missed out on a year’s-worth of SRS payments. At the Trinity Alps Unified School District, this budget shortfall prevented the district from fixing a dangerous outbreak of toxic mold. Multiple buildings in the district were closed, disrupting school for months.
While SRS funding has served as a lifeline for school districts in forest counties, advocates and economists say the cyclical struggle for ever-shrinking funds makes SRS an unsustainable way to support rural students, especially when budget shortfalls can hurt student performance and health.
“This every three-year thing, it’s brutal,” said Jamie Green, superintendent of Trinity Alps Unified School District, in an interview with the Daily Yonder. “Absolutely brutal.”
The law was up for reauthorization in 2024 but died last December without a vote from the House of Representatives. The Senate had already voted unanimously to approve it.
Advocates have continued to fight for reauthorization in the new year. But Congress’ failure to include the legislation in March’s federal spending package raises concerns about another lapse in funding, similar to 2016, that could jeopardize school budgets and leave their futures in flux.
“We can continue advocating,” Green said. “But I don’t know where it goes from here.”
In 2023, Trinity Alps Unified School District received $600,000 from SRS. These funds accounted for 5% of the district’s budget and were essential in paying for teachers, programming, and maintenance work. With no clear path toward reauthorization, Green’s current goal is to do what he can to cushion Trinity Alps for the looming shortfall.
“You don’t buy the new bus that you need. You don’t fix a leaky roof. You don’t replace people that have just retired,” Green said. If the bill isn’t passed, he said the district may have to cut seven jobs, which could lead to larger class sizes, likely hurting the students who need help the most.
“I can’t tell you how stressful it is when I go down to the elementary school and I’m looking at people that I might have to let go that we desperately need,” Green said.
A Century-Old Promise — A Century-Old Fight
The history of federal support for rural schools in forest communities extends far beyond the SRS program’s inception in 2000.
In the late 1800s, large swaths of the country’s forest land were placed under reserve, later designated as National Forest land, by the U.S. government. About 80% percent of the land in Trinity County, for example, is owned by the federal government.
The mass federalization of forest lands prevented rural communities from developing or taxing the land to support local governments and public schools.
“Rural communities were pretty much up in arms…they were concerned by the federal government coming in and taking massive amounts of their land,” said Lonnie Hunt, head of the National Forest Counties and Schools Coalition, a group of community volunteers who advocate for forest counties across the country.
In response to these rural concerns, Congress designated a portion of these forests harvestable for timber. In 1908, President Theodore Roosevelt and chief of the Forest Service Gifford Pinchot introduced a bill that specified that 25% of the revenue raised from National Forests would be shared with the counties that overlapped this forest land to pay for local infrastructure.
For a few decades, this plan worked: Rural counties could fund their schools, roads, and essential services with the revenue gained from logging.
But by the late 20th century, the revenue share proved too volatile for local government and school budgets. Between 1985 and 2000, National Forest payments fluctuated by an average of 30% year-to-year, according to the Congressional Research Service. Regulations like the Northwest Forest Plan that were meant to protect old-growth forests from overharvesting in California, Oregon, and Washington, made it even more difficult to depend on timber revenue.
“For various reasons totally outside the control of these local communities, timber harvesting just pretty much ground to a halt for environmental reasons, challenges, lawsuits, what have you,” Hunt said. “And of course that meant that these local communities suffered a big economic loss.”
This volatility led to the creation of two reforms, which are still in effect today.
The first, Payments in Lieu of Taxes (PILT), are federal payments to counties to offset the local property tax lost from nontaxable public land. PILT funding can only be used for county budgets, not for schools.
The second is a set of transition payments to help counties move away from timber-dependent economies. These payments came from the Northwest Forest Plan and the eventual SRS legislation, passed in 2000.
SRS allocated counties payments based on the average of their three highest timber revenue years between 1986 and 1999. The law was originally authorized through 2006, at which point counties were expected to find new ways to fund their schools and roads.
While some counties successfully pivoted to other industries, more timber-dependent communities had a harder time transitioning, according to Mark Haggerty, a senior fellow at the independent nonprofit research institute Center for American Progress.
“The reason those [counties] were growing is because they were either close to a city, so they were actually participating in the new economy, or they became recreation and retirement destinations because they had a national park or some kind of amenity,” Haggerty said.
“But the rural, isolated timber-dependent communities effectively didn’t recover, no matter what kind of transition assistance was provided.”
This was the case in Skamania County, Washington, which saw a huge change in the amount of money made through timber-related jobs from the 1970s to the 2010s. Between 1970 and 1989, timber earnings accounted for 37% of Skamania County locals’ income, according to a report from the independent research group Headwaters Economics.
By 2014, timber accounted for just 1% of total earnings.
While the U.S. Census Bureau defines Skamania County as a metropolitan area because of its proximity to the large cities of Vancouver and Portland, Oregon, the county has a lot in common with other rural counties that have benefited from SRS. Eighty percent of the county is public land, and 90% is forested. The Columbia River borders it from the south. Its total population is just over 12,000.
“The goal of [the original SRS funding] was very, very admirable,” said Tom Lannen, former Skamania county commissioner and Stevenson resident. “Depending on where you were at, some counties did a marvelous job and had all kinds of resources that allowed them to transition from a timber based county to a much more diverse one.
“Unfortunately, Skamania County and a number of other ones didn’t have that luxury,” he said.
Without other industries to fall back on with the decline of timber, the county could not sustain itself without help from the federal government. That means SRS payments have remained vital in paying for Skamania County’s infrastructure and schools.
But its year-to-year volatility has still left the county scrambling. Over the past 15 years, the amount of money has decreased precipitously, affecting the job skills training programs offered to students.
“We’re trying to hang onto as much of that as we can so our students can stay and have the skills and the abilities that they need to go out and have living-wage jobs in our community,” said Ingrid Colvard, superintendent of the local Stevenson-Carson School District, at a press conference about reauthorizing SRS in late February.
The funding pays for welding and carpentry programs, a post-high school counselor, and a therapist, among other things. “This extra money, this additional 5% – it’s in our budget, and we have to have it to continue these things,” Colvard said.
Some folks in the county say that opening up more of the National Forest to timber harvest could get the community back on the path to economic success and rid them of the need for SRS.
But that would require overturning the decades-old Northwest Forest Plan – no easy feat. And there’s no promise timber harvests would ever be as profitable as they were at the height of production in the 20th century.
And even if timber harvesting were to return, it’s a largely mechanized industry today powered by automated equipment and high-efficiency mills. Timber doesn’t provide the number of jobs that it did before automation, and companies also benefit from large state and local tax incentives.
A mechanized economy doesn’t work for rural places, said Haggerty from the Center for American Progress, leaving behind rural communities that no longer benefit from the timber industry.
“Companies are able to come in and extract wealth from the rural economy without leaving benefits behind,” Haggerty said. “The industry doesn’t support local communities or schools anymore.”
The Search for A Permanent Solution
Haggerty advocates for a new approach — a permanent trust to stabilize funding for rural forest communities.
“A trust makes sure that communities have the resources they need to provide essential services and to plan for the kinds of assets and amenities that they need to help grow their economies and diversify again,” he said. For rural communities, the ability to provide basic services like public schools and nutrition programs is essential. Without it, they risk falling deeper into poverty, with less ability to escape.
An endowment model would establish a permanent trust funded by ongoing receipts from commercial activities on public lands, including the traditional revenue sharing. Under this model, the money earned from timber revenues would be held in perpetuity and invested to generate income, which would then be paid to the rural forest counties from which the resources are being extracted.
The idea behind the endowment model is simple: to invest the existing wealth from non-renewable resources in a way that continues to support these communities without further depleting the land or relying on inconsistent government funding. “It’s not asking the taxpayers for permanent appropriations, and it’s not adding to the debt. But it gives counties and schools predictable payments that they can rely on,” Haggerty said.
To guard against corruption or mismanagement, Congress could authorize an independent entity to establish and manage the trust, one managed by a board that includes the county representatives who rely on the funds, Haggerty said.
Another concern is market volatility. “If you set this thing up in 2007, you would’ve had a huge crash right away,” Haggerty said. “But that’s why you have an investment strategy and a distribution system to try to protect it.”
The creation of a permanent trust is not a new concept. States and counties with large national resources economies, especially those dependent on fossil fuels, have implemented similar models with success.
If Congress had established such an endowment in 1908, instead of the revenue sharing program, today it could distribute $3.2 billion to forest communities and schools, a sum three times larger than the largest distributions from revenue sharing in the 1970s — and 213 times larger than the funds distributed in 2017. Even with a more recent timeline, if an endowment had been created in 2000, instead of the SRS program, it would have been worth $1.3 billion by 2018 and would distribute $33 million to these communities.
The idea has been introduced in Congress several times, with bipartisan support from Senators Ron Wyden (D-OR) and Mike Crapo (R-ID), as well as endorsements from the National Forest Counties and Schools Coalition and the National Association of Counties. Despite this support, the proposal has not gained enough traction to pass.
“We’re always in a reauthorization crunch [for SRS],” Haggerty said. “But by the time you actually start talking about a permanent solution, it’s time to reauthorize again.”
One of the key hurdles is Congress’ reluctance to create a solution that would reduce their control over the funding process. “Congress likes swooping in every year or two or three and saving the [SRS] program,” Haggerty said. “If you set up an endowment and have mandatory spending associated with it, Congress has less to do.”
Opposition also comes from within the forest counties themselves, some of which, like Skamania County, continue to push for increased timber harvests and a return to the old revenue sharing model. Environmental groups, too, have their concerns, as many oppose using timber revenue to fund an endowment, citing the environmental impact of incentivised logging.
Despite these challenges, the endowment model presents a promising solution to the ongoing struggle for stable, reliable funding for schools in rural forest communities. For superintendents, an alternative to the instability of SRS would be a welcome reprieve.
In the meantime, rural superintendents are doing what they can to support their students and communities. “It’s difficult, but you signed up to lead, you didn’t sign up to be a victim. You don’t make excuses to your community,” Trinity Alps superintendent Jamie Green said.
“We’re working as hard as we can for our students. We cannot fail.”
Claire Carlson and Lane Wendell Fischer wrote this article for The Daily Yonder.
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