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Governors’ Denial of Medicaid Expansion Creates Problems for Hospitals

April 12, 2013
Press Release

WASHINGTON—Rep. John Lewis recently wrote a letter to Health and Human Services (HHS) Secretary Kathleen Sebelius highlighting the troubling prospect that federal support to safety-net hospitals might be reduced due to Republican governors’ refusal to expand Medicaid.

The thrust of the ACA was to cover more Americans, spread out the cost of healthcare services among a larger number of people, thus helping to bring individual costs down.  However, the Republican governors of Georgia, Louisiana, Tennessee, Texas, Mississippi and others--states with large populations of poor citizens that seemed to need the coverage the most--very publicly rebuked this coverage simply because it was part of President Obama’s health reform package.

One recent Christian Science Monitor opinion called these decisions “immoral’ because of their direct disregard for the medical plight of millions of Americans in some of the poorest states.  Twenty percent of Georgia’s population, for example, is uninsured.  This rebuke will not only affect the most vulnerable Americans, but Lewis highlights it also will affect hospitals who care for low-income patients to provide life-saving services.

“It is very hard for me to understand how the governor of my own state and others would demonstrate reckless disregard for the dramatic needs that exists among the working poor and low-income Americans,” said Rep. John Lewis.  “The opportunity to serve citizens should not be examined through some partisan lens, especially when reject ion of that opportunity can affect a person’s life or death.  The impact of these decisions will weigh heavily on the most vulnerable citizens, whom government should be seeking to protect, and they may affect the ability of hospitals to serve these citizens, if some solution is not found.”

                Currently, HHS disburses “disproportionate share payments” or  DSH to hospitals who care for large numbers of low-income patients who may be underinsured, uninsured or unable to pay for the services they receive.  Hospitals cannot legally turn patients away, so the federal government compensates those which care for large numbers of the uninsured through the DSH payments.  

                The ACA offers states a significant opportunity to expand Medicaid, and thus cover more vulnerable citizens because the federal government foots 100 percent of the cost for the expansion for 3 years.  In Georgia that would allow 600,000 uninsured people to be covered.  Afterwards, the state would only have to pick up 10 percent of the bill, and the federal government would continue to pay 90 percent of the cost.  To help fund the government’s outlay, the ACA offsets additional costs by cutting DSH payments to safety-net hospitals.  Under the plan, those hospitals should need fewer DSH dollars because more patients would be insured.

However, in the states like Georgia, where governors determined not to expand Medicaid, DSH payments to hospitals, like Grady Memorial for example, will still be reduced unless some kind of adjustment is made.  Those health care institutions that serve a large population of the uninsured would be rendered even less capable of meeting their needs.

                Rep. John Lewis ‘s letter highlights this problem to light in an effort to ignite a suitable federal response.  The White House has since said it is looking for ways to table some DSH payment cuts. (Letter attached)

Other articles on the topic:

NY Times; Washington Post, Paul Krugman