More than 250 Hospitals Urge Congress to Stop DSH Cuts

In a Sept. 14 letter to House and Senate leaders, more than 250 hospitals and health systems that care for low-income and marginalized patients and provide essential community services warned of the “far-reaching effects” of scheduled deep cuts to Medicaid DSH funding.

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House, Senate Majorities Call for Action on DSH

Recent letters to House and Senate leaders signed by bipartisan majorities in each chamber call for immediate action to stop the disastrous $8 billion cut to Medicaid DSH on Oct. 1. Follow these links to read the letters:

See the House letter »
See the Senate letter »
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New Podcast: History of, Threat to Medicaid DSH

Listen to our new podcast series on key policymaking issues for hospitals that provide safety net care. In this episode: the history of Medicaid DSH and the current threat to federal funding for this vital program.

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A Cut to DSH Is a Cut to Medicaid

People and communities across the country rely on essential hospitals — and essential hospitals rely on Medicaid disproportionate share hospital (DSH) funding to keep their doors open. Medicaid DSH cuts put patients at risk.

What is DSH?

Medicaid DSH funding, which Congress established more than four decades ago, helps essential hospitals offset the high uncompensated costs of caring for the many uninsured and underinsured people who rely on these vital safety net providers. Cuts to DSH jeopardize health care access for low-income Americans, including working families and others who face financial hardships.

DSH and Essential Hospitals

Essential hospitals share a mission to care for all people, regardless of their financial means and insurance status. Three-quarters of essential hospitals’ patients are uninsured or have Medicaid or Medicare coverage. Marginalized and underrepresented populations and communities with systemic and structural barriers to care rely on essential hospitals for health and wellness.

Along with their safety net mission, essential hospitals provide specialized, lifesaving services, such as level I trauma and neonatal intensive care; train many physicians, nurses, and other health care professionals; coordinate care across large ambulatory networks; meet public health and crisis response needs; and advance health equity.

Although essential hospitals constitute about 5 percent of all U.S. hospitals, they provide more than 27 percent of charity care nationally, leaving them with an average operating margin 60 percent less than that of other U.S. hospitals. They rely on patchwork federal support — especially Medicaid disproportionate share hospital (DSH) payments. In fact, without Medicaid DSH support, the average essential hospital would operate at a loss (right).

So, What’s the Problem?

Current law includes multiple years of dramatic reductions to Medicaid DSH funding, including an $8 billion cut on Oct. 1, 2023 — two-thirds of all DSH support in the next federal fiscal year. Congress made those cuts 13 years ago with the expectation that coverage gains under the Affordable Care Act would reduce hospitals’ uncompensated costs and, in turn, the need for Medicaid DSH.

But coverage gains fell short of that expectation — by 7 million people compared with the law’s projection for 2019. Now, hospitals’ uncompensated costs are billions of dollars higher than expected, yet the DSH cuts remain — $32 billion from fiscal years 2024 to 2027.

These cuts are simply unsustainable. While no time is right for cuts of this magnitude, their timing this year would be especially damaging as essential hospitals still face high labor and supply costs in the wake of the pandemic. Essential hospitals also face the prospect of millions more uninsured patients this year when the COVID-19 public health emergency — and its expanded Medicaid coverage — end.

What’s at Risk?

Access to vital health care services in communities across the country, especially for people who face financial or social hardships. Also at risk: lifesaving services on which everyone depends, including trauma and burn care, neonatal intensive care, emergency preparedness, and disaster response.

Further, essential hospitals often are a community’s largest employer, and the average essential hospital drives more than $630 million annually in expenditures in state economies. Medicaid DSH cuts threaten more than access to care — they threaten jobs and economic prosperity.

What Can Congress Do?

More than a dozen times — and with bipartisan votes — Congress has delayed or eliminated Medicaid DSH cuts. Lawmakers recognize the basic unfairness of the cuts, given lagging coverage gains, and the vital need for this safety net support.

America’s Essential Hospitals appreciates the strong precedent of bipartisan support for stopping the Medicaid DSH cuts. We urge Congress to act again, before Oct. 1, 2023, to protect this vital safety net support and eliminate DSH reductions for fiscal years 2024 and 2025.

Urge Lawmakers to Support Bill to Avert Medicaid DSH Cuts

House legislation, the Supporting Safety Net Hospitals Act (H.R. 2665), would eliminate $16 billion in Medicaid DSH cuts in fiscal years 2024 and 2025. Urge your House members today to support this vital legislation. Learn more »

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Media inquiries or other questions may be directed to Carl Graziano, senior director of communications, America’s Essential Hospitals, at or 202.585.0102.

America's Essential Hospitals

401 Ninth St. NW Suite 900
Washington, DC 20004

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