Hospitals again ask for delay in funding cuts

People have heard about how strong the healthcare lobby is in the US, and KFF Health News published a piece that gives an overview of how agreed-upon funding cuts have been delayed for over a decade. As helpful background, when Medicaid was enacted in 1965, the program was required to pay the same rates as Medicare. Starting in 1981, states were granted flexibility in setting Medicaid reimbursements. One concern was that hospitals that served a disproportionate number of Medicaid patients would be heavily affected by the drop in reimbursement. Government funds (including federal funds) were made available to compensate those hospitals through what is known as Medicaid Disproportionate Share Hospital (DSH) payments. As the Affordable Care Act (ACA) was being negotiated, one of the selling points was that the the decrease in uninsured would mean more system-wide savings. Since more patients would seek treatment, hospitals "agreed to accept $155 billion in Medicare and Medicaid funding cuts over 10 years." However, the start of those cuts have been delayed 13 times.

Hospitals have pointed out that the uninsured rate has not reached the projected 5% that was predicted before the the passage of the ACA. However, it is unclear whether the agreement was predicated on reaching the 5% threshold, or simply a meaningful reduction of uninsured patients. Additionally, because of some legacy policies, some hospitals benefit from DSH payments even when they might not be serving as many Medicaid patients. The KFF article also notes that "Despite record-high hospital profits and record-low uninsured rates in recent years, the hospital industry again says this is not a good time for cuts." It seems like the policy might have been considerably more straightforward if Medicaid simply kept Medicare rates and did not try to mitigate the discrepancy through DSH payments.