Dr. Clif CleavelandOn Feb. 3, in a 7-to-4 vote, the Health Committee of the Tennessee Senate blocked Insure Tennessee, Gov. Bill Haslam’s proposal to extend access to health care for up to 300,000 poor residents of our state.
Less publicized is the effect of the committee’s vote on the financial stability of “safety net” hospitals, which provide most of the acute care to low-income, uninsured adults and children, the most vulnerable populations in our state.
The great majority of these hospitals are owned and operated by local governments or nonprofit organizations such as universities or religious charities. They are committed by law or through an explicitly stated mission statement to provide acute care for all comers.
In 2013, almost $85 billion was spent for care of the uninsured by the U.S. health care system; hospitals provided $45 billion of the total. Sixty-five percent of the hospitals’ share was offset by government money, predominantly through Medicare and Medicaid programs.
Other federal subsidies came from the Department of Veterans Affairs, block grants for maternal and child care and the Ryan White HIV/AIDS program, which is administered by the U.S. Department of Health and Human Services, Health Resources and Services Administration and the HIV/AIDS Bureau.
Teaching hospitals receive additional funds through Medicare for the care of indigent patients. Contributions from state and local governments, in-kind donations from providers and philanthropic agencies make up the remainder.
Although 64 percent of all acute-care hospitals receive some federal subsidies for providing care that is not paid for by the patients, the poor make up only a small percentage of the total numbers treated by the majority of these hospitals.
In contrast, more than 20 percent of patients treated by hospitals located in the inner city or in poor rural or smalltown areas are uninsured. These hospitals constitute the safety net for the majority of poor and uninsured persons and are critically dependent upon governmental subsidies to keep them in business.
Included in the Affordable Care Act of 2010 was a requirement to expand Medicaid to that portion of the population earning less than 138 percent of the Federal Poverty Level. A U.S. Supreme Court decision in 2012 made the expansion optional for each state. In those states that chose to expand their Medicaid programs, the proportion of uninsured patients dropped dramatically between 2013 and 2014.
Anticipating fewer uninsured patients, in 2014 the ACA included a gradual reduction of federal subsidies for uncompensated care. A $10 billion Medicaid subsidy will be reduced by half by 2019. Medicare’s subsidy will be trimmed until 2021, when it will stand at 72 percent of its 2014 level.
Erlanger Medical Center is among the group of safety-net hospitals in Tennessee that will face cuts of tens of millions of dollars that currently subsidize uncompensated care. How the hospitals and local governments will respond to reduced federal funding is unclear.
In Memphis’ Shelby County, the cut in federal dollars will lead to an estimated $70 million gap in funding for the county-owned and operated Regional One Medical Center. Shelby County Mayor Mark Luttrell indicated that an increase in property taxes might be necessary to cover the deficit.
The seven state senators who killed Insure Tennessee either did not know about the pending slash in federal funding for safety-net hospitals or they did not care. Political ideology trumped practical and humanitarian consideration of the plight of poor people and the hospitals and care-givers that see to their health.
Contact Clif Cleaveland at cleaveland1000@comcast.net.