Medicaid is the largest payor of children’s health care services, covering more than one in three children. As Congress considers making changes to the Medicaid program, it is important to recognize the special role of Medicaid as the single largest children’s health insurance program. Children account for half of all Medicaid beneficiaries but account for only 25 percent of Medicaid spending.
Children’s hospitals provide a significant amount of care for children insured by Medicaid. Children’s hospitals make up less than 5 percent of all hospitals, but account for 47 percent of the hospital care for children who rely on Medicaid and almost all the hospital care for children with complex medical conditions. Medicaid is the single largest payor for children’s hospitals, covering one out of every two patients, on average, compared to 14 percent of patients for all other hospitals.
In Ohio, one in three children relies on Medicaid. Half of the patients in Ohio’s children’s hospitals rely on Medicaid, compared to 12 percent in general hospitals – so any changes in Medicaid reimbursement structures disproportionately affect our hospitals’ financial stability. At Dayton Children’s, we serve a disproportionate share of children from low-income families. Currently 50 percent of the patients at Dayton Children’s are covered by Medicaid.
Cuts to Medicaid often create access barriers for children. On average, Medicaid reimburses children’s hospitals only 77 percent of the cost of care provided, including disproportionate share hospital (DSH) adjustments. However, Medicaid reimburses Dayton Children’s roughly 68 cents on the dollar of costs. In fiscal year 2010, Dayton Children’s had a budget shortfall from Medicaid totaling over $23 million.
Further cuts would only exacerbate existing access issues.
Congress should reject any Medicaid changes that would threaten coverage or access to care for children. Deficit reduction proposals that would reduce the federal investment in this critical program for children could force states to scale back covered services for children, cut provider payments even further below the cost of care, or both. It is essential that children do not bear the burden of Medicaid spending reductions, and it is equally essential that we pursue the savings that can be achieved through innovations and better care.
Ohio’s children’s hospitals have a proven record of cost-savings resulting from quality improvement. Ohio’s children’s hospitals, including Dayton Children’s, have proven that they can save thousands of lives and save millions of dollars through their quality improvement efforts. For example, the Ohio Perinatal Quality Collaborative has saved $20 million by reducing late pre-term births and infections in premature infants.
Additionally, Ohio’s children’s hospitals have worked with the State of Ohio, the business community, health care providers and other stakeholders through the valuable efforts of the BEACON Council to focus on rigorous quality improvement efforts in children’s health care statewide, establishing a foundation upon which future quality and transparency efforts can be built.
Ohio’s children’s hospitals are an essential part of the health care safety net for Ohio’s children, providing care to all Ohio children, regardless of their ability to pay.
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