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Op-Ed: Don't Play Politics with Distribution of Funds for NJ’s Charity Care

Charity-care dollars have to go to safety-net hospitals, rather than being distributed to every facility in the state

linda schwimmen
Linda J. Schwimmer, president and CEO of New Jersey Health Care Quality Institute

New Jersey hospitals cannot legally -- or, in my opinion, morally --turn away patients who need care but cannot pay. They also cannot turn away patients who pay less because they are covered by Medicaid and not private insurance. Hospital doors in New Jersey are open to all people who are sick or injured and in need of emergency care.

Yet our open-door policy inevitably creates an unfair playing field. Hospitals in poorer communities treat more patients who cannot pay anything or who pay less than patients in affluent areas. Federal and state funds try to make up at least some of the difference to these hospitals through charity care, also known as Medicaid’s Disproportionate Share Hospital Payments, or DSH payments.

The governor just announced his budget priorities, which included a sizable cut to the charity-care fund. Details about how much of that fund each hospital will get will be released in the coming weeks. So we begin a rite of spring as predictable as budding tulips: the yearly fight to divvy up the shrinking pool of charity care dollars. But this year we cannot let politics dictate the distribution of these payments. If we do, the federal government will reduce the overall charity care payments sent to New Jersey. That hurts all of us.

Let me explain. New Jersey has historically distributed charity-care dollars based on how much any hospital provided to the uninsured, regardless of what communities those hospitals served. If hospitals in wealthy communities treated even some uninsured patients they got at least some charity care dollars.

The precedent created the expectation that every hospital in New Jersey would get charity care every year.

The Affordable Care Act and the expansion of Medicaid have expanded the number of people in New Jersey who have health insurance. That’s good. But as a result, the state and the federal government are reducing the amount of money given to hospitals through DSH payments and charity care.

Yet despite the smaller pot every acute-care hospital in the state has traditional received some charity care money.

The precedent that every hospital gets charity care must end. The governor’s recent budget address revealed that charity care is again on the chopping block with a cut totaling $150 million in this budget, reducing the total pool from $502 million to $352 million. And the federal government has said it will punish states that fail to prioritize distribution of these funds to the hospitals that need it most.

That could be New Jersey. A recent report to Congress, called the MACPAC report, warned that if New Jersey does not start targeting DSH funds to the hospitals treating the most low-income patients we could see cuts of up to 24 percent in overall DSH funding.

Cuts of that magnitude would hurt New Jersey’s safety-net hospitals, which continue to struggle financially, and the low-income patients they serve. Many of these facilities already face negative operating margins.

The survival of critical safety-net hospitals --as well as their ability to invest in high-quality personnel or infrastructure -- is at risk. The need for charity care will not go away anytime soon. Estimates put our undocumented immigrant population at 525,000 in this state who do not qualify for any insurance coverage. Many legal residents and citizens also still lack coverage

We do not want to live in a society in which ambulances will leave injured people on the highway after a car accident because they do not have insurance. We do not want to live in a state that shuts the hospital door on an uninsured child struggling to breathe through an asthma attack.

Politicians love bringing home some charity-care dollars to the local hospital. That’s politics. But we can’t afford that kind of politics anymore. The stakes are too high.

Linda J. Schwimmer is president and CEO of the New Jersey Heath Care Quality Institute.

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