Healthcare Without a Net

On Wednesday, the U.S. House of Representatives again failed to garner enough votes to overturn President Bush’s veto of a $35 billion expansion of SCHIP, legislation that would have enabled states to extend coverage to almost 4 million uninsured children over the next five years. The bill’s current incarnation was criticized by the Bush Administration and some Republicans for unnecessarily drawing millions of children into a government-subsidized insurance program, allowing benefits for some adults, increasing the federal tobacco tax to $1 per pack, and creating loopholes that might have permitted illegal immigrants access to government assistance for medical care.

The tooth and nail battle over SCHIP is emblematic of not only the complex state of the beleaguered U.S. healthcare system, but also of the diverse experiences and opinions of American citizens regarding the tenuous balance between their own healthcare requirements, the needs of others, and the fundamental question of who pays for it all. What has become clear, particularly in the shadow of an presidential election year is that Americans as a whole—the privately insured, those who receive Medicare and Medicaid support, and the 47 million people who lack insurance—increasingly believe that the status quo isn’t working. In a Wall Street Journal/NBC News poll of more than 1000 adults this week, 34 percent said concern over healthcare was their first or second priority.

CMS Regulations Exacerbate Crisis for Vulnerable Populations

In the months leading up to the first SCHIP veto, the Centers for Medicare and Medicaid Services (CMS) issued two regulations currently under a one-year Congressional moratorium that, unless amended will take effect in 2009. The two regulations will strip billions of dollars in federal funding from public hospitals and safety-net providers that already face a dearth of financial support.

The first severely limits reimbursements to government-operated hospitals, narrows the definition of “public hospitals,” and restricts state Medicaid financing. The effect of this rule change, if the current moratorium is not extended, will hold back almost $19 million in Medicaid reimbursements from San Juan County, New Mexico, in fiscal year 2009, for example. Hundreds of state and county governments across the country will find themselves in similar circumstances, forced to compensate locally for shortfalls or simply try to do more with less.

The second regulation will eliminate federal Medicaid support for graduate medical education (GME) by no longer recognizing GME as medical assistance. The rule will eliminate more than $2 billion in federal monies from a program that many safety-net providers depend upon to meet their staffing needs amid tight budgetary constraints.

America’s Shrinking Safety-Net

According to the National Association of Public Hospitals and Health Systems (NAPH), safety-net hospitals are entities that “provide a significant level of care to low-income, uninsured, and vulnerable populations. Safety-net hospitals are not necessarily distinguished from other providers by ownership – some are publicly owned and operated by local or state governments and some are non-profit. Rather, they are distinguished by their commitment to provide access to care for people with limited or no access to health care due to their financial circumstances, insurance status, or health condition.”

Several other minimum criteria are utilized by the federal government to officially designate safety-net status, but an estimated 700 to 800 hospitals in the U.S. meet further technical definition of a Medicaid disproportionate share hospital (DSH), although more than half of all hospitals in the country receive some Medicaid DSH payments. Today there are roughly 1,300 public hospitals nationwide, but according to NAPH President Larry Gage in a recent New York Times article, there were more than 1,600 such facilities in operation only 15 years ago, with notable closures in major metropolitan areas from Los Angeles to Milwaukee to Washington, DC. Those public hospitals that persist as safety-net providers must contend with grim economic realities in the face of federal Medicaid policy changes such as those outlined above.

X-Ray of a Grave Predicament: Grady Memorial Hospital

Grady Memorial Hospital in Atlanta, Georgia, is one of the largest safety-net hospitals in the country. It is also a major teaching hospital, training 25 percent of Georgia doctors. But the financial burden of Grady’s mission as a charity and emergency care facility has not been adequately subsidized by county or state funding; inexpert management has consistently failed to execute needed budgetary cuts, and federal Medicaid reimbursements have not come close to keeping pace with costs. Staring down a likely $53 million budget deficit this year and in serious danger of losing its accreditation, Grady, like many other providers of its kind, is in a world of hurt.