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Safety-net hospitals brace for cut to federal subsidies

Kaiser Health News / Minnesota Public Radio, October 16, 2012

For more than 20 years, hospitals have relied on subsidies provided by the federal government to help defray costs. But that funding is set to decline starting in 2014 with the full implementation of the federal health law. The assistance is known as DSH payments, for disproportionate share hospital. The $11 billion DSH program provided $75 million to Minnesota hospitals last year. The federal healthcare law won't eliminate DSH payments altogether, but it cuts them by half over five years. The reductions begin in 2014, the same year the law requires most Americans to obtain health insurance or pay a penalty. The theory is that hospitals will need fewer DSH subsidies because they'll be treating a reduced number of patients who lack insurance.