DSH Cuts: A Threat to the Safety Net

Disproportionate share hospital (DSH) payments help cover the uncompensated costs of indigent care. The Affordable Care Act cut these payments, assuming coverage expansion would reduce uncompensated care.  But various federal and state policy decisions and legal actions limited access to coverage and swelled the number of uninsured far beyond those optimistic forecasts. But the DSH cuts remain in law, even as uncompensated care grows dramatically.

Unless Congress acts, Medicaid DSH will be cut by $8 billion Oct. 1, 2023 — two-thirds of all annual program funding — and by $32 billion over the next four fiscal years.

Medicaid DSH: an Unsustainable Future


Millions More Uninsured than Projected

The coverage landscape further underscores how the original justification for DSH cuts — large coverage gains — no longer applies.

Essential Hospitals Cannot Sustain DSH Cuts

Essential hospitals — those that care for millions of low-income, working Americans and others who face financial challenges — already operate with an average margin about 60 percent less than other U.S. hospitals. Without Medicaid DSH, these hospitals would suffer a 0.1 percent loss, on average. For them, Medicaid DSH is vital.


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