While our representatives in Washington debate the nuances of broader health care policy, uninsured Americans are still turning to local hospitals to access basic care, and these hospitals are still on the hook for covering those costs. But if Congress doesn’t act on this, funding for the program that helps keep these hospitals open will lapse, affecting dozens of hospitals across Arizona and the thousands of people who rely on them.
Costs of care not covered by Medicaid, Medicare, or private insurance have a significant financial impact on hospitals. This impact is mitigated in large part thanks to the Medicaid Disproportionate Share Hospital (DSH) program, which provides crucial funding to hospitals to help offset those uncompensated care costs. Without this critical funding, hospitals might have to stop providing services, lay off staff, or raise costs. Though the DSH program is a crucial part of keeping safety-net hospitals open and running, the 116th Congress has neglected to make funding for it a legislative priority. If Congress does not act, $7 billion in cuts to the DSH program hang in the balance.
President Ronald Regan created the DSH program in 1985 to support hospitals that serve a disproportionate number of uninsured patients and low-income patients. The Affordable Care Act (ACA) called for a reduction in DSH program funding, with the assumption that Medicaid expansion would reduce the number of uninsured Americans. The logic was that hospitals would need less DSH funding as the uninsured rate dropped. However, implementation of the ACA and the subsequent expected insured rate did not occur as Congress initially intended, necessitating a postponement of the scheduled reduction.
While the national health care debate often stalls along partisan lines, the DSH program is unique in that it enjoys support across both sides of the aisle. Congress first delayed implementation of the cuts in 2013 in an overwhelmingly bipartisan vote, and have delayed them each year since, most recently in the budget agreement Congress passed in 2018. However, time is running out this year; if Congress does not act soon, $7 billion in cuts to the DSH program will go into effect.
In Arizona, DSH cuts would have an enormous impact on hospitals serving lower income community members. Arizona’s current annual DSH allotment is $171 million, which 46 hospitals rely on to keep their doors open and provide quality care to low-income patients. If Congress fails to delay cuts soon, Arizona hospitals stand to lose $52.4 million in funding the first year — a whopping 30 percent reduction in funding — and double that amount the following year.
These cuts are simply unsustainable for safety-net hospitals, and would force them to cut services, raise rates, or both, resulting in higher premiums, job losses, and in some cases, hospital closures. Lower-income Arizonans who depend on their local hospitals will be forced to find care elsewhere or pay more for the care they need, and communities whose economies rely on local hospitals would suffer. Health care leaders, advocacy groups, and industry experts all widely oppose DSH cuts and agree that Congress must take action to delay them.
As partisan politics dominate Washington, delaying DSH cuts is one issue leaders from both parties can and should agree on. However, the most vulnerable of Americans and the hospitals they rely on will have to reckon with the adverse effects of bipartisan inaction. Why continue delaying what can be dealt with now? With continued uncertainty about funding worrying consumers and providers alike, Senator Martha McSally must work with her colleagues immediately to ensure continued funding for the DSH program and its vital support for Arizona hospitals and patients.
Morgan Tucker is the Arizona State Director for Protect Our Care.