Community Health Centers Brace for More Uninsured

By Steven Ross Johnson  | June 12, 2015

 

The nation's 1,200 federally qualified community health centers would be hit hard by a possible U.S. Supreme Court ruling this month eliminating premium subsidies for federal exchange-plan enrollees.

Such a ruling would have a major effect on the clinics, which are required by law to serve all patients for free or on a sliding-scale basis. They then would have to provide far more uncompensated care, clinic leaders say. Given the shortage of primary-care physicians, community health centers have been key primary-care providers for Americans who have received expanded private and Medicaid coverage under the Affordable Care Act.

“The vast preponderance of people with exchange coverage who are getting care at health centers are low income, below 200% of the federal poverty level,” said Dan Hawkins, policy director for the National Association of Community Health Centers. “If they lose that subsidy, they lose the ability to afford their coverage.”

If the court strikes down the subsidies in the King v. Burwell case, it's estimated that 6.4 million Americans would lose subsidies. It's expected that many of those people would drop coverage because it would become unaffordable. Hawkins estimated that community health centers nationally are serving nearly 1 million patients covered by plans purchased through the federal exchanges.

The clinics' loss of revenue from privately insured patients would come on top of a decline in state funding for the centers over the past few years. According to the NACHC, annual health center funding per uninsured patient was $344 in 2012, compared with a per-patient cost of $687.

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With the subsidies gone, the centers “could draw a line and say they simply don't have the resources to serve any more people,” Hawkins said. “But if these are current patients who have simply lost their coverage, the center is going to have to figure out a way to serve them.”

A sudden spike in uninsured patients could force many clinics to cut back or delay healthcare services. “From a financial standpoint it could be devastating to us,” said Kay Crane, CEO of Piedmont Access to Health Services, a community health center in south central Virginia.

Founded in 2001, Piedmont has grown with the help of federal grants, expanding into dental and behavioral healthcare. It also offers pharmacy services, HIV counseling and pediatric care, with plans to offer OB-GYN services. Unlike many other community health centers, Piedmont sees a substantial share of privately insured patients, who account for nearly a third of its patient-care revenue.

Crane said a large portion of those privately insured patients receive ACA premium subsidies, and that a court ruling ending those subsidies could cut overall revenue by up to 30%. The effect would be exacerbated by the fact that Virginia is one of 21 states that have not expanded Medicaid for low-income adults. The resulting revenue loss would crimp her clinic's plans to expand services, she said.

More broadly, a ruling striking down the subsidies would set back many years of efforts by presidents and congressional leaders of both parties to expand healthcare access to low-income Americans through community health centers. For example, Sen. Roy Blunt (R-Mo.), an ardent Obamacare foe, recently visited a St. Louis community health center that has expanded through ACA funding. “I think (CHCs) are a great example of how you meet the needs of a community that otherwise would not have their needs met nearly as effectively,” Blunt told St. Louis Public Radio.

The number of CHCs has grown from 730 in 2000 to about 1,300; those centers operate more than 9,000 sites throughout the country. The sharp expansion over the past five years was made possible by federal grants under the ACA. The centers served more than 21 million patients in 2013, according to the Kaiser Family Foundation. Of those patients, 14% were covered by private insurance, 41% by Medicaid, and 35% were uninsured.

The increase in privately insured patients seen at community health centers as a result of Obamacare has given the clinics greater financial capacity to serve the uninsured, experts say. “If 100% of their people came in without coverage, they probably would have to do something else because they could never maintain that,” said Judy Solomon, vice president for health policy at the left-leaning Center on Budget and Policy Priorities.

Dr. Stephen McKernan, CEO of Lone Star Family Health Center in Conroe, Texas, said his center is used to serving a high percentage of people without insurance. “We took care of the people before they had insurance, so it would not affect us that negatively if the patients went back to being uninsured,” he said.

On the other hand, his patients would suffer. “This lawsuit would punish the people who are buying insurance with a subsidy who have very little means to get healthcare insurance otherwise,” he said.

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CMS announced a proposal Tuesday to "modernize the Medicaid managed care regulations," which haven't been revised in a decade.

"The proposed rule would align the rules governing Medicaid managed care with those of other major sources of coverage, including coverage through Qualified Health Plans and Medicare Advantage plans," according to a CMS statement.

Most managed care plans offer health benefits and other services through contracts between state agencies and managed care organizations (MCOs). States set up and supervise their own managed care programs within the boundaries of federal requirements spelled out in Medicaid law and additional regulations. They also receive a fixed monthly payment for each enrolled Medicaid beneficiary.