Essential hospitals’ mission means they shoulder a disproportionate share of unreimbursed care. They constitute about 5 percent of all U.S. hospitals but provide more than 27 percent of charity care nationally. This leaves them with an average operating margin 60 percent less than that of other U.S. hospitals. Because of this mission, essential hospitals rely on a patchwork of federal support, including Medicaid disproportionate share hospital (DSH) payments, which Congress established to stabilize these financially fragile hospitals.
Unless Congress acts, $32 billion in DSH cuts over the next four years will undermine essential hospitals and could push some to the brink. The scheduled DSH cuts include an $8 billion reduction on October 1, 2023 — more than two-thirds of all federal DSH spending annually.
America’s Essential Hospitals appreciates the strong precedent of bipartisan support for stopping the Medicaid DSH cuts. We urge Congress to act swiftly, before the October 1 deadline, to preserve this vital safety net support and eliminate the DSH reductions for fiscal years 2024 and 2025.
