How Secure Is the Safety Net? the Future of the Nation's Community Health Care Centers and Public Hospitals Is Grave

By Boulard, Garry | State Legislatures, March 2005 | Go to article overview

How Secure Is the Safety Net? the Future of the Nation's Community Health Care Centers and Public Hospitals Is Grave


Boulard, Garry, State Legislatures


The community health center in Council Bluffs, Iowa, serves a largely rural clientele with up to 9,000 patients a year. More than half are on Medicaid or uninsured. Almost a third are at or below the poverty level.

In the scope of its services and demographic base, it is like almost all of the more than 1,000 operating community health centers in the United States--unique to its own service area.

But in an era of historic economic challenges affecting both the nation's community health centers, public hospitals and other safety net providers, the Council Bluffs Community Health Center is hardly singular: it has had to lay off staff, close down a satellite clinic at a nearby two-year college, and even suspend a popular discounted prescription drug program.

One of the reasons for the center's woes stems from the growing number of uninsured patients it has taken on. Between 1997 and 2002, the number of patients served at community health centers grew by 36 percent while the number of uninsured users virtually doubled since 1990.

"The only way a health center can really succeed is with a mix of insured and uninsured," Dr. Bery Engebretsen, interim executive director of the center, recently remarked to the local newspaper, as reductions in the center's services were announced in early January.

"That is one of the big challenges for community health centers," says Engebretsen, "to make sure they don't overextend themselves and take on too many uninsured."

IT'S SERIOUS

The picture for community health centers on a national scale is sobering. "Practically every center is financially challenged in its own way," says Amy Simmons, a spokesperson with the National Association of Community Health Centers in Bethesda.

"When you consider that more than 36 million people in this country don't even have access to health care, that is not where we want to be," she says. "We want to be expanding our services, so that we can reach more people."

The prospects for the nation's public hospitals are similarly daunting. More than 2,000 have minimal profit margins. "Most of these facilities are running very, very close operations right now," says Christine Burch, the executive director of the National Association of Public Hospitals and Health Systems in Washington, D.C. "About 52 percent of our members actually have negative balances."

Why are safety net providers having such a hard time of it? Reductions in state Medicaid programs combined with an increased number of uninsured due to unemployment or loss of employer sponsored insurance accounts for large parts of the problem.

Medicaid plays an important role in financing health care for the nation's low-income. Nowhere is this more apparent than with our safety net providers--public hospitals, community health centers and other providers that deliver a disproportionate level of health care to the uninsured and those on Medicaid. In 2002, Medicaid served as the largest source of revenue for community health centers and public hospitals--35 percent and 37 percent respectively. Medicaid and uninsured patients make up about 75 percent of the health center patient population compared to 11 percent seen in private practices.

Financing for some community health centers suffered an additional blow because of strapped state budgets. According to a report issued by the National Association of Community Health Centers last summer, some 18 percent of direct state funding--totaling more than $40 million--was cut in fiscal year 2004.

"The impact was significant, particularly in the few states where funding was completely eliminated," contends the report, "Fighting Back--Health Centers Work to Restore State Funding and Medicaid/SCHIP Cuts."

NO END IN SIGHT

For some states, the cuts will continue. Sixteen states report Medicaid budget overruns. What the states will spend in general fund expenditures on Medicaid this year will be exceeded only by K-12 education. …

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