Environmental Scan to Identify the Major Research Questions and Metrics for Monitoring the Effects of the Affordable Care Act on Safety Net Hospitals. 5. Other Federal, State, and Local Subsidies


Safety net hospitals often receive other subsidies from state and local governments to help cover operating costs and care to the uninsured. For NAPH member hospitals, these subsidies account for almost one-third of care provided to uninsured persons (Zaman et al. 2012). Public hospitals operated by county or city governments often receive local property and/or sales tax revenues—in some cases, raised specifically for the hospital through special tax districts or voter initiatives. Some states also assess fees on health care providers, payers, or others to establish pools from which funds are allocated to safety net providers to help cover their uncompensated care costs. Often, these state and local funds are eligible for matching supplemental payments from the federal government. Hospital revenues from these sources tend to fluctuate, however, due in part to how the funding mechanisms are structured, and provider taxes are under growing federal scrutiny (Felland and Stark 2012). In California, revenues from state sales tax and vehicle licensing fees are distributed to counties to help cover the expense of caring for uninsured people; most of these funds go to the core safety net hospitals.

Strained state and local budgets are resulting in reductions of these subsidies in some areas, and there is concern that there will be further reductions based on the assumption that they are less necessary due to the insurance coverage expansions (Felland et al. 2010).

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