Note: Joe Dunn is NACHC’s Senior Vice President for Public Policy and Advocacy
A month ago, Congress provided the most significant increase in Community Health Center funding in a decade through the Consolidated Appropriations Act. Looking forward, health center funding is at $4.4 billion per year through December. All health center advocates will need to push Congress to build on that funding increase and provide additional years of certainty.
Before we get to that advocacy push, it’s essential to reflect on health center’s financial picture today and over the past few years, especially considering a recent report from the Government Accountability Office that looked at health center revenue from 2018-2022. The report provides a snapshot in time without the context of:
- Rising costs health centers face
- How revenue growth was driven by policies no longer in place
- The Congressional Budget Office’s recent report finding that health center investments lead to lower spending in Medicare and Medicaid
It’s important to unpack these issues in that order.
Workforce Challenges Facing Health Centers
First, Community Health Centers have always operated with workforce challenges, given longstanding underinvestment in primary care and competition from larger, well-resourced healthcare providers. The COVID-19 pandemic severely exacerbated these difficulties as wages dramatically increased and turnover was pronounced. A 2022 study by NACHC found that almost 70 percent of health centers reported losing between 5-25 percent of their workforce in the prior six months, and 65 percent of respondents stated that employees left for better opportunities at competing healthcare organizations received up to a 25 percent increase in salary. Nearly every health center that responded agreed that additional federal funding would be helpful to provide salaries commensurate with other employers.
Today, health centers still struggle with a tight labor market. They continue to do their best to retain existing employees and recruit the next generation of qualified and dedicated individuals, but they are struggling in the face of rising costs and a shortage of healthcare providers.
Evolving Medicaid Environment Impacts Health Centers
Second, Congress overwhelmingly passed the Families First Coronavirus Response Act early in the Covid-19 pandemic. A critical provision in the law prohibited states from assessing and removing individuals from Medicaid, and that provision led to Medicaid enrollment growing by over 21 million individuals. This policy was essential to ensure that individuals had a regular source of primary care during a trying time for the nation. Since half of health center patients are covered through Medicaid and centers provide care to about one in six total Medicaid beneficiaries, it’s no surprise that the Medicaid revenue increased along with the increase in Medicaid enrollment.
Since the end of the public health emergency, states have begun to reevaluate eligibility for Medicaid. According to data from KFF, about 21 percent of the people who were enrolled before the redetermination, or close to 20 million, lost coverage. Health centers are doing everything they can to connect qualified individuals to coverage. Still, about a quarter of health center patients have lost Medicaid, leading to a substantial loss of revenue – an average of $600,000 per health center.
Independent studies repeatedly underscore that health centers provide more cost-effective care for Medicaid enrollees than other providers by investing in primary care. For example, the latest evidence shows that health center Medicaid patients have 10 percent higher utilization and 19 percent higher primary care costs. For the average health center patient, Medicaid spends about $250 more per year for primary care but $1,650 less across other types of care by lowering other more costly types of care – thereby saving money in the long run.1
Temporary COVID Funding Expired
During the pandemic, Congress provided billions of dollars in temporary COVID-19 pandemic funding to support health centers respond to the public health emergency. As longstanding trusted providers, health centers were leaders in helping their communities respond to the changing environment. They quickly developed locally tailored solutions, tested and vaccinated millions of people, and ramped up their telehealth capacity to benefit patients. Emergency funding was essential to stabilize operations and ensure patients got the care they needed to keep them healthy and productive.
Serving the Needs of the Growing Medicare Population
Consistent with the nation’s overall aging, health centers serve more Medicare beneficiaries than ever. Seniors are the fastest-growing patient population, and their numbers have doubled over the last decade. As a result, health center revenue from Medicare has grown over time. It is expected to continue to do so as millions more become eligible and benefit from integrated, comprehensive care at health centers.
It’s critical to reflect on the health center program’s successes and how it continues to grow. During these four years, the number of health center patients grew from 28.4 million to 30.5 million – a 7 percent increase. Stable federal funding and policies will ensure that health centers can continue serving more patients comprehensively and the millions waiting for affordable primary care in their communities.
Endnotes
Nocon R. Research on Health Center Value and Financial Performance. Presented at the NACHC Community Health Institute. August, 2022. Publication in-press.