Chapter 3 continues the Commission’s work on its annual report on Medicaid disproportionate share hospital (DSH) allotments to states. As in prior years, the Commission continues to find little meaningful relationship between state DSH allotments and the number of uninsured individuals; the amounts and sources of hospitals’ uncompensated care costs; and the number of hospitals with high levels of uncompensated care that also provide essential community services for low-income, uninsured, and vulnerable populations.
During the COVID-19 public health emergency, policy responses were effective in reducing the uninsured rate, enhancing hospital finances, and boosting DSH allotments. In recent years, some states have begun substituting other types of Medicaid payments for DSHs. In the Commission’s view, DSH policy should be assessed in the context of all other Medicaid payments to hospitals.
At the time of the chapter’s drafting, DSH allotment reductions were scheduled to take effect in fiscal year (FY) 2024. Congress has since delayed reductions until January 1, 2025. The amount of the reductions has remained the same ($8 billion) a year, which is about half of states’ unreduced allotment amounts. The report includes an analysis of the effects of these reductions in FY 2026, which is similar to the projected effects of the reductions currently scheduled for FY 2025.
From: March 2024 Report to Congress on Medicaid and CHIP