Linking Medicaid Expansion and Cuts to Disproportionate-Share Hospitals: Will Safety Nets Survive?

The predominant mechanism by which the health care reforms of the Patient Protection and Affordable Care Act of 2010 are to be financed is through the government's simultaneous defunding of major portions of Medicare and Medicaid, including the reduction of up to 75% of federal payments to disproportionate-share hospitals. The justification for curtailment of other public programs is that after Medicaid expansion under the Affordable Care Act, the decrease in the proportion of uninsured among the U.S. population will render disproportionate-share hospital payments extraneous and unnecessary. Such justification was reiterated in the recent American College of Obstetricians and Gynecologists Committee Opinion No. 627, entitled Health Care for Unauthorized Immigrants. Herein, the soundness of the Committee Opinion's proposed policy is evaluated by reviewing available literature on the potential effect of Medicaid disproportionate-share hospital cuts with and without concomitant Medicaid expansion. Limitations of Medicaid expansion efforts before and under the Affordable Care Act, the disproportionate-share hospital payment program, and other legislation providing safety net hospitals with (some) relief of financial burdens related to uncompensated care are explicated. Findings raise concern that acceptance of cuts of up to 75% of federal disproportionate-share hospital funds on the premise that nationwide state expansion of Medicaid will offset the difference may be overly optimistic. Indeed, foregoing disproportionate-share hospital payments undercuts the otherwise laudable intent of Committee Opinion No. 627, namely to advocate for universal health care for all women, including undocumented immigrants.