Of all the healthcare providers most severely impacted by the U.S. Supreme Court's Patient Protection and Affordable Care Act ruling last month, public safety net hospitals, of which there are 1,000 in this country, are at the top of the list.
These are the hospitals caring millions of the underserved. They are the sickest and most difficult patients. The biggest hospitals often can be found in the poorest parts of town. Think of troubled Parkland Health & Hospital System in Dallas, or Jackson Memorial Health System in Miami.
Now these hospitals are threatened with a double whammy. First, if they exist in one of the 30 states now threatening to refuse to expand their Medicaid eligibility rules to 138% of the federal poverty level, they'll continue to provide uncompensated care for many of their sickest patients.
Second, the PPACA sets forth a mechanism by which the Medicaid Disproportionate Share Hospital (DSH) program will be dramatically scaled back. This year the program will send an estimated $10 billion in federal funds to hospitals that treat large numbers of Medicaid uninsured patients, The schedule is to cut $.05 billion in 2014, $.06 billion in 2015 and in 2016, $1.8 billion in 2017, $5 billion in 2019 an $4 billion in 2020, almost half of its current amount.
With these converging forces squeezing the healthcare safety net, HealthLeaders Media asked Bruce Siegel, MD, President and CEO of the National Association of Public Hospitals and Health Systems, for his reaction.
HLM: In your statement, you've estimated that between 4 million and 13.8 million people who would have been eligible for Medicaid under the healthcare reform law's expansion provisions happen to live in states that have decided against that expansion, as the Supreme Court ruled they could. How can these issues be resolved?
Siegel: We take the governors very seriously. We believe there are 30 states that could potentially not expand Medicaid, the 26 in the lawsuit plus four others who have made statements. We take that very seriously. This is not a joke and we don't think it's a bluff. These states have a record of turning down federal money. Florida turned down stimulus funds. So though you hear people saying, 'Oh, it will be okay at the end; they'll expand.' We're not convinced of that at all.
HLM: What percentage of the burden of the failure to expand in these states will be borne by the safety net hospitals you represent?
Siegel: The lion's share, especially in Florida, Texas, and Louisiana. If you go to Parkland in Dallas or Jackson Memorial in Miami, the care of the uninsured is very concentrated in those hospitals. In the big cities of America, the majority of charity care is born by our members.
HLM: What do you mean "lion's share"?
Siegel: The majority, more than half of the burden.
HLM: What options do you have before you, at this point, to fight back?
Siegel: The question for us is, how can (the federal government) make the Medicaid expansion optional but leave these enormous disproportionate share fund (DSH) cuts that are in the Affordable Care Act. The ACA cuts the DSH funds by about half, and though it's phased in, you're looking at cuts of over $5 billion a year when the cuts are maxed...$5.6 billion by 2019 per year. Safety net hospitals depend on that money to care for uninsured patients and were banking on the coverage expansion to make up for that loss of money.
So what we're seeing now, and if you cut the DSH, it will be a disaster, a disaster for the safety net and a disaster for patients. You can have a safety net for public hospitals or you can have Medicaid coverage. One or the other. But what's happening is that we are walking away from both.
HLM: What's the solution? Obviously you wish states would not decline the expansion?
Siegel: Yes. We hope, I hope, that citizens put pressure on their states to expand and I hope that HHS (the U.S. Department of Health and Human Services) finds a way to cajole the states into expanding. And I hope that Congress restores the DSH cuts. But hope is not policy.
We need real action on this, but now we have gridlock in Washington that is going to go at least through the election. And 13 million people may not get coverage and may not have a safety net because of gridlock.
HLM: Where will the biggest impact from this hit?
Siegel: The biggest gap in coverage will be in Texas and Florida, and smaller [impact] in other states.
HLM: How many safety net hospitals are in states that indicate they won't expand their Medicaid programs?
Siegel: My educated estimate is that there are hundreds of hospitals that will be impacted. And there's a lot in the south because that's where the potential impact is here. The south and in Texas. They are critical places.
HLM: Do hospitals have any clout they can use to make this point?
Siegel: A lot will depend on the united front in these states with their state leaders. If they do that, because it's the right thing for patients, they'll have a better shot. But it's going to be a real uphill battle in some states, because for some governors, not expanding will be their badge of courage. They will proudly not expand out of principle.
HLM: Do you have any direct comments from your members you can share about the impact they see?
Siegel: One member told me today that if we don't expand Medicaid, and we have DSH cuts, we will close our doors. This was in a Western state.