BY John Hawkins, President and CEO, THA
Figuratively, we in the health care world call it the “safety net”: the hospitals that care for vulnerable patient populations and the mechanisms that allow them to provide that care. But like any literal safety net, it has to be checked and reinforced in order to make sure it will still do the job it’s intended to do: serving Medicaid patients and those who are uninsured.
For years, that safety net has faced a serious threat of sagging, if not collapsing. This year, the Texas Hospital Association and other hospital advocates have been stressing to lawmakers the need to pull it taut and secure it once again by repealing three years of payment cuts to the Medicaid Disproportionate Share Hospital (DSH) program. At press time, without congressional action by the end of the year, those cuts would go into effect on Jan. 1, 2025. However, as of mid-December, it appeared Congress was on the verge of addressing the issue in its end-of-year funding package – by repealing the cuts planned for fiscal year (FY) 2025 and delaying the reductions for the following two years until FY 2027-28, instead of FY 2026-27. If this comes to fruition, it’s very good news for our hospitals.
In Texas alone – where more people without health insurance reside than in any other state – the impact of the currently pending cuts would be staggering enough: an estimated $778 million each year for fiscal years (FY) 2025 through 2027, and a total of more than $2.3 billion over those three years. THA has broken down the impact for each congressional district in Texas in FY 2025 if the planned cuts go into effect without an act of Congress to repeal or delay them. The impact varies across the regions of our enormous state, but for just one example, you can look at Houston’s congressional district 9, where four DSH hospitals exist to provide safety-net care. Those four hospitals would lose nearly $100 million in funding just in FY 2025.
Nationally, the DSH cuts from FYs 2025-27 would total $8 billion in each of these three fiscal years, for a total hit of $24 billion. All over the U.S., these Medicaid payments are crucial for keeping safety-net facilities financially stable.
Those unfamiliar with the DSH program, and how we got here, might wonder why there are such deep reductions pending on such a vital piece of our health care infrastructure. These DSH payment cuts were originally written into the Affordable Care Act – yes, the same one that became law way back in 2010 – with the expectation that states would eventually expand Medicaid and reduce their numbers of uninsured. That, in turn, would reduce each state’s DSH funding needs.
But as most readers of this column no doubt know, Texas is one of the few remaining states that hasn’t expanded Medicaid. As a result, our state’s need for robust DSH funding hasn’t lessened.
If the end-of-year funding package includes a repeal of the FY 2025 cuts, and pushes off the others until FYs 2027 and 2028, that would immediately save $8 billion nationally and give us more time to work on stopping the rest of these reductions – and it would be yet another victory for hospital outreach on this issue. Earlier this year, our advocacy helped produce an outright repeal of the reductions that were planned for FY 2024 – a huge incremental win in this battle. Then, a bipartisan sign-on letter to leadership in the House of Representatives earlier this month, led by Rep. Dan Crenshaw (R-Houston), urged action to prevent the DSH cuts. A majority of our state’s delegation in the House signed onto the letter.
The DSH program is vital to our state’s health, and the hospitals that participate in it simply can’t afford these reductions. Now and in the future, we’ll keep sending Congress the same message: Let our safety net sit firmly in place.