KHN Morning Briefing

Summaries of health policy coverage from major news organizations

Safety Net Hospitals Worry Health Reform Poses Threat

The Associated Press/San Jose Mercury News: "To all the knotty issues involved in health care overhaul, add one more: The proposals in Congress may threaten the funding and future of the nation's already-struggling safety net hospitals." Hospital leaders have been supportive of expanding coverage, "but they worry financing the expansion will cause some teetering urban hospitals to deteriorate and close." In particular, they worry about "proposals to finance national reform that would reduce payments gradually to hospitals handling more than their share of uninsured patients. One proposal would reduce these funds - called DSH payments for 'disproportionate share hospital' - by $20 billion, in three large annual chunks starting in 2017." About half of all hospitals nationwide receive DSH payments, a small segment of which "provide most of the nation's charity care to the poor."

"Lawmakers reason that when more Americans have insurance, there will be less need for the payments. Instead, hospitals would get paid by their newly covered patients' insurance plans. A trigger in the House health care legislation would start the cuts only after the nation achieved a significant increase in insurance coverage. But critics say illegal immigrants, the mentally ill and drug addicts will keep arriving at safety net hospitals without insurance. Illegal immigrants will be ineligible for the expanded coverage proposed by Congress" (Johnson, 9/3).

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