Demand rises for health care centers while the funding continues to drop
As the demand for services through federal health centers increases and Medicaid and other funding decreases, centers' ability to provide the same level of services or even remain open is threatened, according to a new report from the National Association of Community Health Centers (NACHC).
"How these trends will shape the future of the safety net and America's health care delivery system depends largely on the crosscurrents of policy changes under way at the state and federal level," according to the NACHC report. "Congress and national leaders are considering proposals that could dramatically restructure Medicaid. States are already enacting their own Medicaid cuts to trim budget costs, swelling the ranks of the uninsured. With eroding public insurance and the attrition of other revenue sources, health centers will not be able to meet the needs of a nation that, by all accounts, is gripped by a deepening health care crisis. The public health consequences of a crippled safety net will impact not just health centers alone, but also the rest of America's health care system. The loss of primary care providers will cause racial and ethnic health disparities to soar, leading to more avoidable illness and increased mortality. Hospital emergency rooms, already challenged by long lines and uncompensated care costs, will be forced to care for a growing number of low-income and uninsured patients who will have no place else to go."
NACHC communications director Amy Simmons tells State Health Watch the report is the latest in a series looking at the role that health centers play in delivering care.
"We wanted to look at how Medicaid cuts impact patient care," she says. "We're already seeing some cuts with Section 1115 waivers. The trend has been that the waivers are used not to expand coverage or innovate delivery, but to make cuts, and we wanted to see the impact."
Health centers are in their 40th year, one of the last remaining programs from President Johnson's Great Society. They essentially are unchanged from how early health care leaders envisioned them — locally owned, nonprofit, and community-oriented health care providers that improve access to care for millions of low-income and medically underserved Americans.
Open to all
"No one is turned away regardless of their insurance status or ability to pay," the report asserts. "They are a medical home to 15 million patients who live in rural areas around the country."
According to NACHC, independent evaluations over the last 40 years have found that the care received at health centers is among the most cost-effective anywhere.
Health center patients represent one in seven low-income people, including one in four at or below the federal poverty line; one of every eight uninsured Americans, including one in five low-income uninsured; one in nine Medicaid beneficiaries; one in 10 minorities; and one in 10 rural residents.
"Health center patients are disproportionately low-income, uninsured, or publicly insured racial and ethnic minorities," the report declares. "Health center patients also suffer from poorer health than the general population."
The report notes that over the last several years, health centers have seen increases in the number of patients with all insurance types except for patients who rely on certain public insurance such as non-Medicaid expansion SCHIP and state-funded programs. Actually, the proportion of patients with other public insurance has been declining since 2001, according to the study, most likely linked to cuts in state-funded insurance programs and non-Medicaid SCHIP, although the number of Medicaid patients seen has increased.
Having an impact on the increase in total patients, many of whom are low-income, is the fact that most health centers experienced a growth rate of uninsured much higher than the national average of 8.2%. And many also experienced significant declines in the number of patients with Medicaid between 2003 and 2004. In the same time period, 587 health centers experienced a rise in the number of patients without insurance. More than 230 (26%) reported an increase of 20% or more. The association says even more troubling is that 314 health centers (35.6%) experienced a decline in Medicaid patients, and among those with declining rates of Medicaid patients, 60% also saw increasing numbers of uninsured patients.
The reports detailed Medicaid cuts in eligibility and new or higher cost-sharing arrangements for Minnesota, Rhode Island, Tennessee, Nebraska, North Carolina, and Massachusetts, and said the impact of the cuts "has been immediate and dramatic at health centers in each of these states and many others. Each of those states reported a decline in the total number of Medicaid beneficiaries served by health centers relative to all patients between 2002 and 2003 or 2003 and 2004."
Costs comparable to others
NACHC reported the cost of care at health centers is comparable to or even less than private, office-based doctors, even as the centers provide high quality care and enabling services to a growing number of patients. But between 2003 and 2004, costs per patient rose 5.3%, while the number of patients rose 5.9%. However, between 1999 and 2004, costs per patient grew slower than national health expenditures per capita over the same period, indicating that health centers have kept some costs down.
"The rising cost of care at health centers generally stems from three factors: rising costs of delivering health care, an increasing and disproportionately medically vulnerable patient population, and an increase in the number and type of services that health centers offer," the association said. "Soaring health care costs can be observed in every health care sector, and health centers are not sheltered from this reality."
While health centers on average have been able to generate enough revenue to cover their costs, operating margins have remained low. Even as nonprofit health care providers, centers rely on margins to ensure financial stability. Any surplus, which tends to be negligible in comparison to costs or revenue, can be used to care for more uninsured patients in the following year, or even to cover costs related to unexpected events such as public health outbreaks, natural disasters such as hurricanes and floods, and even disaster preparedness.
Over the last few years, health centers' operating margins on average have tended to hover around 1%, although margins were half that rate in 2003. Two in five federally funded health centers reported operating deficits last year. That compares to 36% of hospitals experiencing negative operating margins in 2003. Almost 15% of centers had operating deficits exceeding 10% of their revenue. And the health centers with zero and negative margins had higher growth in the number of low-income and uninsured patients than centers that reported positive margins. Moreover, they tend to collect less from Medicaid, Medicare, and other public insurance programs.
The association was quick to point out that health center operating margins are often lower than other provider types. For example, hospitals averaged a 3.3% margin in 2003, while health centers were 0.5% that year. At such low levels, NACHC said, a single unexpected event such as a disease outbreak, hurricane, snowstorm, or power outage, could easily put a health center in deficit, threatening its ability to provide comprehensive care in its community.
Given the constraints and challenges facing health centers, NACHC also looked at the adverse impacts of centers closing.
"Should a health center be forced to close," the report cautioned, "an entire community would be adversely affected by the termination of valuable public health services, such as immunizations, and the prospect of rising health care costs as a consequence. Already the percentage of Americans with a usual place to go for care and the percentage who assess their health as excellent or very good are on the decline. Thus, cuts in Medicaid that negatively impact centers are, in fact, penny-wise and pound-foolish, and access to primary care is important for the entire health care system. Even a small drop in revenue affects health centers' ability to serve more patients."
It is the association's assessment that Medicaid erosion, coupled with further attrition of other revenue sources, poses the most direct threat to the ability of health centers to meet the health care needs of their communities.
"Even as Congress and the administration plan to increase funding to support new health centers, sustaining diverse and dependable revenue streams for all health centers is essential if the program is to survive and continue its role in helping to meet the nation's most pressing health care needs," the report said.
Ms. Simmons tells SHW it's not clear what will happen to proposed Medicaid cuts in light of the health care needs of the victims of hurricanes Katrina and Rita. The impact will vary from state to state, she says, depending on what changes each state makes. She notes that the day major cuts to Tennessee's TennCare program were implemented, between 50 and 100 new patients showed up one health center in the state seeking appointments.
NACHC assistant director of state affairs Dawn McKinney tells SHW she expects centers will continue to pick up new patients among those who lose their Medicaid coverage or are uninsured.
"The point of our report is that we see the rate of uninsured two to three times the national average," Ms. Simmons says. "It's a signal, much like a canary in a coal mine."
In addition, according to NACHC research and data analyst Michelle Proser, the number of low-income patients served by centers has increased four times the national average. She says Medicaid traditionally has represented 36% of health center revenue and thus those that serve a large number of Medicaid patients are especially at risk. The specific impact of factors contributing to financial insecurity, Proser says, depends on the environment in each community and state.
As the demand for services through federal health centers increases and Medicaid and other funding decreases, centers' ability to provide the same level of services or even remain open is threatened, ...You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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