Will Reform Strengthen or Strain the Health Care Safety Net?

RWJF Scholars chart opportunities and problems and pose solutions for protecting the health care institutions that serve the most vulnerable.

As the Affordable Care Act (ACA) takes shape, it is becoming clear that it will place new and different pressures on health care institutions that provide free or low-cost care without regard to an individual’s ability to pay. Rather than eliminating the need for these organizations, “the safety net will continue to be as crucial a part of the health care system after reform as before reform—perhaps even more so,” explains Sara Rosenbaum, JD, a Robert Wood Johnson Foundation (RWJF) Investigator in Health Policy Research (2000).  Yet, “no one has taken a comprehensive look at the safety net in nearly a decade,” says Mark Hall, JD, who is also an RWJF Investigator in Health Policy Research (2004).

Working with a team of RWJF grantees that included Clinical Scholars, Scholars in Health Policy Research, as well as other Investigators in Health Policy Research, Hall and Rosenbaum co-edited the book, The Health Care Safety Net in a Post-Reform World (Rutgers University Press, 2012).

To give a sense of just how significant a change the ACA will bring about, Hall and Rosenbaum explain, “experts estimate that when fully implemented in 2019, the ACA will increase [health insurance] coverage from about 83 percent of the total U.S. population to 94 percent.” 

Expanding the number of Americans with health insurance is a great achievement by any measure, but the authors point out that “more than 20 million people…will remain uninsured.”  In addition, obtaining insurance coverage will not remove many nonfinancial barriers to care, such as provider shortages and limited access in certain geographical areas.

Hall, Rosenbaum and their co-authors—leading experts on vulnerable populations and health reform—offer an in-depth, historical analysis of the evolution of the nation’s community health care network and safety-net hospitals.  The 19 authors also map the many different dilemmas that public hospitals and other safety-net institutions will face. Challenges aside, the authors make it clear that they see the safety net “as an integral component of health insurance reform and an ongoing and essential part of the health care system.”

The New Face of the Uninsured

One of the primary ways the ACA will stress the safety net system, Hall and Rosenbaum point out, is by altering the composition of the uninsured population while increasing demand for care from a newly insured population. In this shifting landscape, undocumented residents will most likely become a more prominent component of the low-income uninsured population because the ACA primarily benefits citizens and legal residents.  Safety-net institutions usually serve the uninsured, regardless of their legal status.

The new uninsured will also include adults who are still unable to afford health insurance after insurance exchanges and other measures are put in place. Hall, who is a professor of law and public health at Wake Forest School of Medicine, and Rosenbaum, the chair of the department of health policy at George Washington University, say this group is estimated to range from 14 to 25 percent of the population, depending on region. A large number of the people who will struggle to pay insurance premiums higher than the ACA affordability threshold will be middle-income rather than poor. In addition, complex subsidy formulas and eligibility requirements will create a population that experiences gaps in insurance coverage for a variety of reasons.

The Crucial Role of Community Health Centers

The first section of the book charts the history of community health centers and offers new ideas about reinventing them to serve new groups. Using the Massachusetts example, Rosenbaum explains that because of a host of issues—population characteristics, location and other features—“medically underserved communities will remain underserved even with expanded coverage.”

She says this enhanced need requires “full clinical integration of health centers into the new care delivery arrangements and financing structures established under the law.”  Rosenbaum acknowledges that this integration will be complex because of community health centers’ corporate structure, patient population composition and the federal regulations that control the program. 

The last chapters in the section address the challenges of providing care for undocumented populations and training new primary care physicians through the community health center network, and the structure and sustainability of the community health center system.

Potential Strain on Public Hospitals

In a second section of the book, RWJF Scholar in Health Policy Research Michael Gusmano, PhD, (1995-1997) and RWJF Investigators in Health Policy Research Frank Thompson, PhD, (2007) and Gloria Bazzoli, PhD, (1999) and Sheryl L. Garland, MHA, tackle issues facing public hospitals and academic medical centers as a result of reform.

When crafting the ACA, federal government officials assumed that health reform would greatly decrease the number of uninsured people. As a result, beginning in 2014, the law reduces the amount of funding to hospitals that serve a disproportionate share of uninsured or low-income patients. This will leave public hospitals with an increased (nearly double) Medicaid patient load, but the ACA does not require states to increase the hospital reimbursement rate for these patients.  The rates are approximately 10 percent below the hospitals’ costs for providing care.  The Supreme Court’s decision in NFIB v. Sebelius further complicates the picture for disproportionate share hospitals (DSHs), since it allows states to opt out of the Medicaid expansion, meaning that declines in DSH funding could begin in 2014, regardless of whether a state expands Medicaid coverage to offset those losses.

Gusmano and Thompson review the development of the DSH payment system, in light of the financial stresses these changes will most likely cause for the public hospital system.

Bazolli, an economist, and Garland, a hospital administrator, explore the importance of academic medical centers and public hospitals to the health care safety net and how that role has evolved over the years.  Michelle Ko, MD, and RWJF Investigator Jack Needleman, PhD, (1999) follow with a discussion of the recent changes in public hospital capacity and the issues behind public hospital closures, conversions and openings.  The authors suggest methods for addressing the challenges public hospitals and academic medical centers will face as a result of reform.

In the book’s last section, Hall analyzes the real definition of universal access to care, examining several international models, and whether universal access can be achieved in the United States by expanding the capacity of safety-net institutions.  Alison Snow Jones, PhD, a former professor of public health at Drexel University who completed her portion of the book in her last year of life, considers the history and future of the health care safety net in light of the ongoing controversy over the potential of safety-net institutions to “crowd out” the private insurance market.

A Comprehensive View

The book gives a 360-degree view of the growth, current status and possible future of the health care safety net, along with several recommendations for how it can become an integral and useful part of reform.  Suggestions include, “using community health centers to help train the increasing number of primary care physicians who will be needed to provide care under the ACA,” Hall says, “and structuring safety-net institutions to link care across hospitals and community health centers.”

Hall explains that the authors came together for the RWJF-funded The Health Care Safety Net in a Post-Reform World book project after teams of RWJF Investigators met to discuss safety net issues. “The group quickly concluded that the issue was ‘on the front-burner’ for the implementation of reform,” Rosenbaum says. This conclusion  has only gained in importance as the potential for a slowing of the Medicaid expansion has become increasingly clear in the wake of the Supreme Court’s 2012 ruling.

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