Are we doomed to repeat the Building Improvement Law story?

Like the Affordable Care Act and other important social spending measures before it, the Human Infrastructure Bill, now before Congress, the Recovery Efficiency Act will lower barriers to affordable health care for millions of Americans. This is a commendable goal that safety net hospitals welcome as they care for the country’s low-income and marginalized patients.

But those same hospitals could fall prey to another trait that the Build Back Better Act shares with the ACA: rosy outlook for coverage, which experience has shown may not live up to expectations.

In a dozen states that have rejected the expansion of Medicaid, the law will expand ACA market coverage to people in the coverage gap — those whose income is too high to qualify for Medicaid but too low for tax credits in the ACA market. But it’s a double-edged sword for hospitals that have a safety mission: The Economic Recovery Act will also cut welfare support payments in those states, on the assumption that more insured patients will compensate for the loss.

The ACA has followed the same path, albeit nationwide. In both cases, disproportionate shares of Medicaid Hospital Benefits (DSH), a lifeline for hospitals caring for large numbers of uninsured and underinsured patients, are at risk. The Recovery Efficiency Act will go further and limit federal contributions to funds that several states use to cover uncompensated hospital treatment costs.

Despite all the advances that have been made — including adding tens of millions of Americans to the ranks of the insured — ACA has yet to meet its founders’ coverage projections. However, there is a drastic reduction in Medicaid DSH in the law, justified by these initial estimates. Recognizing the mismatch between what was supposed and what came out, Congress wisely postponed the DSH cut for Medicaid, and most recently canceled the portions altogether.

The experience further frustrates Congress, and the administration is poised to repeat the story of the Recovery Efficiency Act. The projected $ 4.7 billion DSH cuts and additional cuts in uncompensated health care will not pass the prudent policy test for several reasons.

The main argument against layoffs is that they will punish hospitals for government policy decisions outside their control and, in turn, harm the very patients the law is intended to help. The Reconstruction Improvement Act is a club of sorts against states holding back expansion, but directly targets suppliers with little influence over expansion decisions. Worse, a cut in support vital to social safety nets would jeopardize the care of people of color and others disproportionately affected by the pandemic, potentially undermining coverage gains. The law would also backfire, forcing hospitals with the least resources and the poorest patients to pay for expansion – hardly anything that promotes equity.

Cuts fail for other reasons as well. The policy will not adjust for fluctuations in the Medicaid population or the cost of uncompensated care (ACA has taken the same approach to reducing DSH Medicaid). It would also lead to significant and costly change without data showing that such disruptions are in the best interests of Medicaid or its beneficiaries. The policy would also set a worrying precedent for punishing states for refusing to act on the plan’s supplementary plan.

This is compounded by the fact that hospitals that need social support the most will not see an increase in the number of commercially insured patients, as promised by the Build Back Better Act. The Institute of Urban Studies recently looked into this issue and concluded that the benefits of the law “will not necessarily go to the same hospitals that will support the DSH budget cut. Thus, some hospitals may be affected by the proposed changes. ” This is not encouraging, especially as major hospitals continue to grapple with the dire financial losses associated with the fight against COVID-19.

As policymakers work to ensure that as many people as possible get health coverage, they need to be clear about the prospects for reaching everyone and remember the need for strong social safety nets when expectations fail. They can start by rejecting hospital cuts in the Recovery Efficiency Act.

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