Medicaid Expansion Doubts, Funding Cuts Seen Putting Public Hospitals in Tight Spot

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A double whammy of cuts in federal funding for safety-net hospitals and fewer states participating in a planned Medicaid expansion under the health care reform law will have “disastrous consequences” for the nation's low-income population, the National Association of Public Hospitals and Health Systems (NAPH) warned Oct. 25.

The group, which represents some 200 hospitals and health systems providing care to uninsured and low-income Americans, estimated these providers would see $53.3 billion in uncompensated care costs by 2019, much more than originally estimated under the Affordable Care Act.

ACA cut federal funding for safety-net providers by $14.1 billion for the period from 2014 through 2019. Specifically, the cuts would reduce funding under the Medicaid disproportionate share hospital (DSH) program, which provides enhanced funding for hospitals and other providers that serve higher-than-average numbers of uninsured patients.

In its position paper, NAPH pointed out that the DSH funding reduction was part of “a careful balance” that was tied to a major expansion of Medicaid included in ACA, which was intended to pick up much of the uncompensated care costs for the uninsured.

Court Decision Injects Uncertainty.

This balance was upset by the U.S. Supreme Court's decision in June on ACA, which effectively made the Medicaid expansion voluntary on the part of states. “Now the cuts to DSH--unchanged by the court's decision--will come against a backdrop of great uncertainty regarding expanded [Medicaid] coverage and the potential for significant shortfalls in federal support for safety net hospitals,” NAPH said.

The Congressional Budget Office has estimated that the court's decision will result in 6 million to 10 million more uninsured individuals than estimated when ACA was passed in March 2010, NAPH noted.

Using data from the Congressional Budget Office, the U.S. Census Bureau, and a survey by the American Hospital Association, NAPH estimated that the higher number of uninsured could result in uncompensated care costs for safety-net providers that are $53.3 billion higher than estimated when Congress passed ACA.

The combined effect of more uninsured and DSH funding cuts “will jeopardize access to important health care services for vulnerable people and shift additional and burdensome uncompensated care costs onto state and local governments, providers, and taxpayers,” according to NAPH.

The group emphasized that DSH funding, even at current levels, fails to reimburse safety-net providers for the full extent of the uncompensated care they provide. In 2010, an NAPH survey of 87 member hospitals showed they collectively incurred more than $8.4 billion in uncompensated care costs but received only $4 billion in Medicaid DSH payments.

Calling on Congress to restore the DSH funding, NAPH said, “The threat of an even greater imbalance created by voluntary Medicaid expansion and guaranteed DSH cuts cannot be justified.”

NAPH added: “If allowed to move forward, this imbalance will have disastrous consequences for safety net patients. The significant decrease in safety net hospital funding and continued high levels of uncompensated care will limit patients' access to lifesaving services.”

By Ralph Lindeman  

The NAPH position paper is at