As concerns mount over a possible whirlwind of federal budget cuts to an array of state programs and agencies – from housing to education to infrastructure – one obscure program in particular poses a major threat to healthcare for New York City’s poorer, uninsured residents, and especially its Latino population.
Unlike most of the imminent budget slashing, the possible reduction in federal funding for the Disproportionate Share Hospital (DSH) program starting October 1 is not a product of the Trump administration. In fact, the payments, provided to hospitals to counteract the cost of care for people with no insurance or those on Medicaid, were initially slated to start tapering off in 2014 before the reductions were delayed by Congress.
If the extension expires as scheduled on Sunday, hospitals in New York state will immediately start losing about $60 million a month in funding.
“There’s this chunk of money that was originally scheduled to phase out under the Affordable Care Act,” says Charles Brecher, senior advisor for health policy at the Citizens Budget Commission. The idea was that as more people got insured under Obamacare, hospitals wouldn’t need as much in additional compensatory payments.
Yet in New York City, one particular group remains disproportionately uninsured: Latinos. According to a report released on Wednesday by the city Department of Health and Mental Hygiene (DOHMH), seven years after the passage of Obamacare, 22 percent of the city’s current Latino population does not have health insurance. Within this group, New Yorkers of Mexican descent are the worst off, at a staggering 54 percent uninsured. Individuals born outside the United States who have been in the country less than ten years are the most likely to lack insurance.
In practice, this means that those without insurance are a lot less likely to use cheaper, preventive health care — like regular doctor appointments and checkups — and more likely to rely on expensive after-the-fact care like emergency room visits. It also means health issues can go unaddressed until they’ve become too complicated or painful to ignore.
What would losing federal hospital funding mean for the uninsured? For one thing, prenatal services for pregnant women could be slashed in a city that had managed to drive down its infant mortality rate to 30 points below the U.S. average. It could mean that the poorest New Yorkers, already squeezed by skyrocketing rents and ineffective transit, could find themselves deep in debt for an impromptu hospital stay. Uninsured Latinos, who have higher rates of obesity and high blood pressure than the general population, could develop diabetes and its attendant consequences before seeking any treatment. And fewer people could have access to HIV medication and the HIV-prevention drug PrEP if distribution to uninsured individuals is reduced as budgets are shuffled around.
The DSH program’s funds come from a mix of federal, state, and local dollars, split evenly between federal and nonfederal sources. In New York, state law effectively puts New York City’s Health + Hospitals (HHC) last in the pecking order of disbursements, meaning a potential cut would be a direct hit to the finances of the health system that treats the greatest number of uninsured residents in the state.
“The distribution of DSH money in New York state has always been questionable,” says Assemblymember Dick Gottfried, the longtime chair of the Health Committee. “It has always penalized the Health and Hospitals Corporation, and has also shortchanged a lot of hospitals that do the bulk of care for poor people.” Gottfried has introduced legislation to boost state Medicaid payments, which would also draw funding from the federal government, and favors a wholesale overhaul of the state’s healthcare system.
Gottfried believes that the solution is to implement a system of single-payer healthcare to curb the current structure, in which “the major academic medical centers carry an enormous amount of weight” and hospitals have a greater incentive to chase well-off patients and their higher reimbursement rates. “The gall bladder of a multimillionaire should be worth just as much to a hospital as the gall bladder of someone who’s uninsured or on Medicaid,” he says.
Such a proposal would require the support of Governor Andrew Cuomo, a centrist who in recent days expressed some tempered support for single-payer while maintaining that it should be implemented at the federal level.
Last week, the governor said the eventuality of the DSH funding cut would require Albany lawmakers to go back to the drawing board on the state budget, and called on Congress to reconsider the extension. “If we lose $2 billion on October 1 from the federal government, the budget is gone,” he told the Business Council of New York State.
The governor’s office estimated that if left in place, the cuts would total $2.6 billion by 2025. Brecher says that the next fiscal year alone would bring reductions between $300 million and $350 million, which would have to be eaten entirely by HHC.
An HHC spokesperson tells the Voice that “without DSH funding, NYC Health + Hospital’s essential mission to provide care for all, including the uninsured and underinsured, would be seriously threatened,” while insisting that the corporation is pushing lawmakers to stop or at least minimize reductions. (He declined to state which particular health services might be impacted by the shortfall.) Though HHC might receive more Medicaid funding from the state and federal government, or greater DSH funding from the city, it would almost certainly still have to cut back on services if the federal DSH money doesn’t materialize.
The specter of cuts isn’t new, and contingencies are built into the HHC’s financial plans, though Brecher questions whether these plans are sound. “They’ve been running deficits even without this DSH money,” he says, adding that “the governor and the legislature are in a position to say, ‘all of this doesn’t have to come from the Health and Hospitals Corporation.’” Other hospitals across the state, he says, don’t have to treat nearly the same volume of uninsured people as New York City hospitals do.
After introducing the DOHMH report on Latino Health, Deputy Mayor for Health and Human Services Dr. Herminia Palacio told the Voice that one potential avenue for combating possible cuts was to keep gathering relevant evidence. “Having this kind of nuanced data,” she said, will allow health advocates to “benchmark where we’re going so that hopefully we won’t see some of these federal policies come to fruition.”
It’s unclear, though, to what extent any supporting evidence will really factor into Congress’ ultimate decision. Though the funding extension technically expires at the start of the federal fiscal year 2018 on October 1, a new extension can be authorized later. “In theory they could restore this during the course of the fiscal year, and I think that’s what some people are hoping for based on precedent,” says Brecher. “But this Congress is kind of unpredictable.”
Gottfried has a more candid assessment of the extension’s chances in Congress. “I consider it a good day when I can figure out what’s going to happen in Albany,” he says. “I would never try to figure out what’s going to happen in Washington.”