Delay DSH cuts and find a sustainable fix for uncompensated care costs

Delay DSH cuts and find a sustainable fix for uncompensated care costs
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As Congress stares down its next deadline to fund the federal government, millions of low-income, working Americans and others who face financial challenges and their hospitals have one message: Don’t forget about us.

Their concern is understandable: Congress left town before the holiday with no action on crushing funding cuts to the hospitals that form the backbone of our health care safety net. These Medicaid disproportionate share hospital (DSH) cuts help partially offset hospitals’ uncompensated costs of caring for uninsured and underinsured people.

Since 2013, in three strongly bipartisan votes, Congress has made the right decision to delay the onset of Medicaid DSH cuts. Lawmakers understood that the original justification for the cuts — that Affordable Care Act (ACA) coverage gains would reduce the need for DSH — didn’t apply, and never really had.


Not long after enactment of the ACA, which included the DSH cuts, the U.S. Supreme Court ruled states could opt out of Medicaid expansion. Many did, leaving millions of patients without coverage and essential hospitals to absorb uncompensated care costs far higher than expected when Congress wrote the DSH cuts into law.

Yet, the Medicaid DSH cuts remained, baked into the law and with no mechanism to respond to fluctuations in coverage levels. The current fiscal year’s cut is $2 billion and that grows steadily through 2025 to $8 billion, for a total of $43 billion over the next eight years.

Essential hospitals like mine, the University of Texas Medical Branch (UTMB Health) in Galveston, Texas, simply can’t sustain cuts of this magnitude without making difficult cost-cutting decisions that affect everyone in the community.

We have no choice: Medicaid DSH is a vital part of the patchwork of federal, state, and local funding that keeps the doors open at essential hospitals. If we lose any piece of that patchwork, it starts to unravel.

For hospitals like ours, Medicaid DSH is the difference between an annual operating loss of 3.6 percent and a modest positive margin of 3.2 percent, based on national data. Still, that positive margin is well less than half that of other hospitals, reflecting essential hospitals’ commitment to a mission that often goes uncompensated or under-compensated.

Understand that these cuts affect not only low-income patients, but put everyone and every community at risk. Essential hospitals typically stand on the front lines of emergencies, serving as a source of level I trauma and burn care, disaster response, and other specialized services no other hospital can provide. These are services all of us might need some day, regardless of our financial status.

The people of Galveston and surrounding areas know well how important institutions such as UTMB Health are to community well-being. We endured a terrible hurricane season in 2017, including Hurricane Harvey, which brought devastating rain to much of southeast Texas. Throughout it all, we kept our three hospitals open, our emergency departments staffed, and our communities safe.

Medicaid DSH contributes to the strength and resiliency of the nation’s safety-net hospitals, which care not only for the less fortunate among us, but that protect all people in times of great need. Take away that support, and you undermine a hospital’s financial stability and its ability to respond when the community needs it most.

Congress has an opportunity to finish what it left undone before the holiday break: Pass a minimum two-year delay of the Medicaid DSH cuts as part of its next government funding measure. Passing a delay is well within lawmakers’ grasp.

The House of Representatives already has voted for a two-year delay as part of its Children’s Health Insurance Program funding bill, the Championing healthy kids Act. Further, 221 bipartisan House members signed a letter last fall calling on House leaders to pass a DSH cuts delay. Similar bipartisan support for a delay exists in the Senate.

With a delay, policymakers and hospitals will have time to find sustainable, long-term solutions to the persistent problem of uncompensated care — solutions that keep our hospitals and the people and communities they serve strong.

Donna Sollenberger is the chair of board of directors for America's Essential Hospitals and the executive vice president and CEO of UTMB Health System at The University of Texas Medical Branch.