Build Back Better Proposal Includes Punitive and Misguided DSH Cuts

November 04, 2021

On Nov. 1, WHA expressed strong concerns over the proposed cuts to federal Disproportionate Share Hospital (DSH) caps included in President Joe Biden's Build Back Better framework.
In the proposed legislation, states that do not take the traditional Medicaid expansion would see a 12.5% cut to their federal DSH allotments. Wisconsin is considered a low DSH state because it does not utilize its full federal DSH allotment, and therefore, hospitals in Wisconsin would not be directly impacted by this. However, the proposal would limit Wisconsin's flexibility to increase DSH matching federal funding in the future.
WHA President and CEO Eric Borgerding expressed WHA's opposition to this punitive measure. "We oppose the federal government using a DSH cap cut to leverage pushing about 40,000-60,000 Wisconsin citizens off their commercial ACA Marketplace insurance and onto Medicaid,” said Borgerding. “Ironically, we have more people eligible for Medicaid that just don’t sign up than we do uninsured people between 100% and 138% of the federal poverty level. Let’s first get them covered in Medicaid while building on the ACA-based coverage strategies that have worked so well here in Wisconsin.”
WHA also expressed its strong opposition to members of Wisconsin's congressional delegation and urged Congress to drop these proposed cuts from the legislation. "Wisconsin is a unique state given that while it has not taken the traditional federal Medicaid expansion, it already covers people up to 100% of the federal poverty level and transitions those above that level to the ACA subsidized plans. The ACA marketplace subsidies have worked very well at increasing coverage in Wisconsin; we are currently doing better than 80% of traditional expansion states . . . this proposal would unfairly punish Wisconsin—even though it has no coverage gap—by limiting our future flexibility should our state decide to maximize our state DSH contributions like many other states do," WHA wrote to Wisconsin’s congressional delegation health care staff.
Only days after this legislation was introduced, Democrats experienced a major political defeat when Republican candidate for governor Glenn Youngkin became the first Republican to win a major statewide office in Virginia in more than a decade. This result seems to have amplified concerns from moderate Democrats who have been worried about public blowback to many of the provisions in the Build Back Better framework. WHA will continue to express its concerns over these proposed cuts and closely follow new developments over this and other potential year-end spending packages.
Contact Jon Hoelter with questions.

This story originally appeared in the November 04, 2021 edition of WHA Newsletter