How Cuts to Safety Net Hospitals Impact the Uninsured in a State that Rejected Medicaid Expansion Funding

by Miriam Harmatz, Florida Legal Services

Much has been written—from blogs to briefs—documenting the tremendous positive impacts of Medicaid expansion. Less well-documented are the negative impacts that flow from rejecting expansion. Obviously, non-expansion states fail to reap the profound benefits of expansion. But they are not just failing to move forward with the expansion’s huge financial boom to health care providers and improved individual and population health. Instead, they are moving backward. The “health “ of both providers and the uninsured in non-expansion states is going from bad to worse as scheduled cuts to local safety net hospitals have begun to take effect.

Living in a non-expansion state like Florida is like watching a slow motion train wreck in your own neighborhood. As with any major local disaster, responsible county leaders should understand the causes and consequences, and this particular disaster requires a basic grasp of Medicaid hospital financing. Unfortunately, this topic is mind-bogglingly complex. It involves an alphabet soup of programs—LIP, DSH, RE, RA, IGT—and is currently understood by only a tiny handful of officials, industry insiders and policy wonks. In an effort to educate more key stakeholders, my office recently released the first of three county specific briefs explaining the implications of local safety net funding reductions and structural changes. We hope this resource will enable local leaders to both understand and address county specific funding issues and re-engage their community leaders and policy makers in dealing with the cost of treating uninsured residents.

But rather than use this guest blog opportunity to dive into arcane Medicaid financing stream issues related safety net hospitals in non-expansion states with a managed care system and an uncompensated care pool program within an 1115 waiver, I’d like to put a human face on one casualty of this train wreck. In mid January, I received a call from Senator Nelson’s office requesting assistance on behalf of a low-income constituent in Miami. The family of Maria Huaman, a mother with 3 young children, was desperately trying to get her transferred to Miami’s public safety-net hospital. Maria needed a lung transplant in order to survive. According to the family, the county hospital, which is the only local transplant center, allegedly refused to admit her for an evaluation because she did not have insurance and could not pay the requested large deposit. Maria had recently been enrolled in a market place plan, but the coverage was not effective until February.

As a long time Miami legal services lawyer, I knew that the county’s public hospital had a charity care program and that under the program’s eligibility requirements, Maria was entitled to free or reduced cost care without a preadmission deposit. I immediately emailed the hospital officials citing the relevant standards and “demanding” her admission for evaluation. But by that time it was too late. Maria died the next morning. The Miami Herald covered her family’s struggle with the hospital in a front-page story.

While the story focused on the hospital’s alleged refusal to accept Maria’s transfer without a $350,000 deposit, the reporter also included factual context and background relevant to the safety net’s failure, i.e. the Florida legislature turning down federal money to provide coverage for single, childless adults as well as low-income parents like Maria. The head of the hospital’s transplant unit, Dr. Ernesto Pretto, Jr., wrote an op-ed calling out for the need to “highlight the impact that the failure to expand Medicaid under Obamacare is having on thousands of sick and uninsured in Florida.” According to Dr.Pretto, “this is but one of many tragic stories that could have been prevented had the governor and the Florida Legislature agreed to accept federal funds to expand its Medicaid program to include low wage earners, such as the [Maria[Huaman] Marquezes.”

When Florida leaders ultimately reengage with this issue, they should not be allowed to shift blame to the federal government as they did in 2015 when Gov. Scott sued CMS over continuation of the state’s Low income Pool (LIP) waiver. Leaders should not forget the numerous problems with LIP, including the fact that there was never remotely enough funding to cover the cost of treating the uninsured (even at the height of LIP), and that it was often difficult or impossible for low-income residents to access a hospital’s charity care program.

In sum, CMS has articulated reasoned and responsible principles for reviewing any state waiver requests, including the indisputable principle that coverage is a much better use of public funds than uncompensated care pools such as the LIP. But regrettably, tragedies like Maria’s will likely continue and increase in non-expansion states because the funding for safety nets is being legitimately reduced and not replaced with expansion funding.