Increase in health center funding falls short

Potential Medicaid cuts could further threaten the centers' role in the health care safety net, study finds.

By — Posted April 4, 2005

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Washington -- Despite recent infusions of federal dollars, community health centers are struggling under the weight of growing demand and the threat of Medicaid cuts, according to a recent report prepared for the National Assn. of Community Health Centers.

In 2002, President Bush launched a five-year initiative to expand health center capacity by 6.1 million patients. About 10.3 million were served in 2001. There are now more than 1,000 centers serving 15 million people in 3,600 neighborhoods and communities, the report showed. They provide care for one in eight of the uninsured.

The president's proposed fiscal year 2006 budget includes another increase of $304 million for community health centers. With that additional funding, Bush's initial expansion plan should be completed next year. He has announced a new goal of putting a health center in every poor county.

According to the report, there are 929 poor counties with 20 million people who have no access to a community health center.

While increased federal funding is appreciated, demand continues to outstrip health center resources, said Dan Hawkins, vice president of federal, state and public affairs at NACHC.

The report notes that for every one low-income, uninsured patient that a health center treats, there are four others needing services. Some states have more difficulty meeting this need than others.

Oklahoma, for example, has 64 poor counties, but only 10 of those have a health center. That means that each center would have to see 40,000 patients to cover the state's uninsured population, said Greta Shepherd Stewart, MPH, executive director of the Oklahoma Primary Care Assn.

Many poor communities are ready to support health centers. But in 2004, the government could afford to fund less than one new health center for every 10 communities that applied for federal help, Hawkins said.

Medicaid funding worries

Now the health center community sees a new threat on the horizon. The Bush administration is discussing strategies to reduce rising Medicaid costs, which some experts worry could cause the states to end the practice of paying health centers augmented Medicaid rates. Medicaid payments, on average, constitute 36% of health center revenues.

"If Medicaid starts paying 40 cents on the dollar instead of 96 cents on the dollar, where's that money going to come from?" Hawkins said.

At the same time, the administration is moving forward with plans to give states more discretion over whom and what Medicaid covers. About 65% of program expenditures are on people and services considered optional under the federal statute.

Revenue loss from dropping optional Medicaid populations would wipe out any benefit health centers get from the extra $304 million in federal funding, Hawkins said.

Undermining the centers' ability to serve Medicaid patients may be penny-wise but pound-foolish, Hawkins said.

The centers have been shown to save Medicaid an average of 30% per beneficiary by reducing the use of inpatient, emergency department and specialty services, the report shows.

In addition, they offer many poor and low-income patients the only local access to physician, pharmacy and ancillary services in communities with few private practices, Hawkins said.

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External links

"Nation's Health at Risk III," National Assn. of Community Health Centers, March, in pdf (link)

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