Medicaid DSH Cuts Put Patients at Risk

Essential hospitals and the people and communities they serve depend on Medicaid disproportionate share hospital (DSH) support. We thank Congress for delaying damaging cuts to this vital funding stream through fiscal year 2019. Now, we must work together on a long-term, sustainable solution to the problem of uncompensated care costs.

What is DSH? Medicaid DSH partly offsets the uncompensated care costs borne by hospitals that care for many uninsured and underinsured patients—low-income working families and others who face economic hardships.

So, what’s the problem? The Affordable Care Act significantly cut DSH payments, assuming coverage expansion would reduce hospitals’ uncompensated costs. But the U.S. Supreme Court made Medicaid expansion optional, which upset this careful balance. Now, uncompensated costs are billions of dollars higher than expected, yet the DSH cuts—$44 billion through 2025—remain.

What can Congress do? In four strongly bipartisan votes since 2013, including one this year, Congress wisely has chosen to delay Medicaid DSH cuts. Lawmakers recognize the basic unfairness of the cuts, given lagging coverage gains. But we can put off this problem for only so long.

Congress now must work with hospitals and other stakeholders to use the breathing room of the latest delay to find a permanent solution to uncompensated costs that protects patients and the hospitals on which they depend.