Witness Testimony
Mr. Bill Noce Jr.
President and Chief Executive Officer
Childrens Hospital
Los Angeles
4650 Sunset Blvd.
Los Angeles, CA, 90027
Inter-governmental Transfers: Violations of the Federal-State Medicaid Partnership or Legitimate State Budget Tool?"
Subcommittee on Health
March 18, 2004
09:30 AM
Mr. Chairman, thank you for the opportunity to testify before you today on
Medicaid and its financing.
My name is Bill Noce, and I am the president and chief executive officer of
Childrens Hospital Los Angeles (CHLA). I also chair the board of trustees of the
National Association of Children's Hospitals (N.A.C.H.) in Alexandria, VA.
Founded in 1995, N.A.C.H. is the public policy affiliate of the National
Association of Children's Hospitals and Related Institutions (NACHRI). N.A.C.H.
represents more than 120 children's hospitals nationwide, including independent
acute care children's hospitals, children's hospitals within larger hospitals,
and children's specialty and
rehabilitation hospitals. N.A.C.H. assists them in fulfilling their missions
of clinical care, education, research, and advocacy devoted to children's unique
health needs.
Founded more than 100 years ago, CHLA is a not-for-profit pediatric academic
medical center. We provide nearly 300 beds for inpatient care, 30 clinics, one
of the nation's largest pediatric residency training programs, and one of the
leading pediatric research centers to meet children's unique health care needs.
We are a regional and national pediatric center for all children and our ability
to do all of this depends on the performance of Medicaid.
I am not an expert in designing different ways for states to achieve Medicaid
matching dollars. Nor is CHLA, as a not-for-profit private institution, a
transferring financing entity. I am, however, an expert in running a hospital
staffed by dedicated physicians and other professionals whose sole mission is to
provide health care to the sickest children. Unfortunately this has made me an
expert in the challenges all children's hospitals face because of the lack of
financial stability in the Medicaid program.
Overview: Three Main Points
In my remarks, I would like to underscore three points.
- No one has a more vested interest in the financial integrity and strength
of Medicaid than the providers devoted to patients assisted by Medicaid.
- No one will be hurt more by changes in the financing of Medicaid than
enrollees and providers, including children's hospitals and the poor
children who rely on Medicaid for their health coverage.
- Experimenting with state/federal Medicaid financing must be balanced with
the need for stabilized funding for Medicaid and its multiple missions,
particularly in challenging fiscal times.
Children's Hospitals Are Indispensable to Children's Health Care
I would like to begin with a quick snapshot of children's hospitals, which
illustrates the roles they play in children's health care.
Children's health services, particularly specialty care, are concentrated in
relatively few institutions. Only three percent of all hospitals, children's
hospitals provide 40 percent of all hospital care for children in this country.
- Children's hospitals are the major providers of both inpatient and
outpatient services. For example, CHLA provides more than 85,000 days of
inpatient care and more than 285,000 outpatient visits a year.
- Nationally, children's hospitals provide more than 80 percent of the
hospital care required by children with serious illnesses, such as cancer or
heart disease.
- We train the majority of the nation's pediatricians, virtually all of its
pediatric subspecialists, and the majority of our pediatric research
scientists.
- We house the nation's leading pediatric biomedical and health services
research centers. More than a third of all of the National Institutes of
Health's pediatric research funding supports the pediatric research in
children's hospitals.
- We are also major safety net providers for the children in our
communities. At CHLA, for example, we are doctor, clinic, dentist and
hospital for low-income children. We work hand in glove with the community
health centers in our area, providing staff and taking referrals for
children needing specialty care
Children's Hospitals and Their Services Depend on Medicaid
Medicaid is by far the largest payer of patient care provided by children's
hospitals.
On average, children's hospitals devote nearly 50% of their patient care to
children assisted by Medicaid. My own hospital devotes 70% of our patient care
to patients covered by MediCal - the California Medicaid program.
Every year most of my children's hospital colleagues and I, along with
pediatricians, struggle in our states to avoid Medicaid provider cuts or cuts in
children's coverage.
Medicaid currently does not come close to paying the cost of the care
required for the children it covers. On average, Medicaid pays for 76 percent of
the cost of patient care provided by a children's hospital. In my own hospital,
Medicaid pays for less than 70 percent of the cost of care. For outpatient
primary and specialty care, as well as physician care, the picture is even
worse.
Disproportionate share hospital payments, which have been at least partially
funded through intergovernmental transfers (IGTs) from public hospitals or
hospital districts in some states such as mine, have made an important
difference. Even with DSH payments, Medicaid still pays an average of only 84
percent of the cost of care. Without IGTs, I don't know that we would receive
even that level of payment.
Children's Coverage Depends on Medicaid
Medicaid serves many missions in the preserving the nation's health care
safety net. One mission that is not always recognized is that Medicaid is by far
the nation's largest payer of health care for children, particularly very ill
children. Children are half of all Medicaid beneficiaries, yet they account for
less than 25 percent of all Medicaid spending. On the other hand, two-thirds of
Medicaid spending goes to provide services to the elderly and the disable,
including very expensive long-term care services.
Mr. Chairman, and other members of the Subcommittee, please keep this is mind
as you evaluate the significance and effectiveness of Medicaid spending.
- Children account for more than half of all Medicaid recipients. Three
quarters are children and their mothers.
- Medicaid covers one in four children, one in three infants, and one in
three children with special health care needs.
- In the most recent economic downturn, two million additional children
would have been added to the ranks of the uninsured if it were not for
Medicaid.
Why Changes in Medicaid Financing Affect All Children
N.A.C.H. and I want to ensure that all Medicaid dollars are spent on
Medicaid-related services and that its financing is sound. But, we urge you to
consider any changes in legitimate Medicaid financing in light of those of us
"on the frontlines," who will most directly feel the impact of reduced
funds.
Medicaid plays such a large role in financing children's hospitals that
reductions in Medicaid spending would seriously damage our ability to serve all
children, not just children of low-income families, as well as add to the
numbers of uninsured children. For example:
- Reductions in Medicaid mean children's hospitals may have to look at
longer waiting times for visits to our clinics and emergency departments, as
well as potential clinic closings.
- They mean children's hospitals may have to look at the sustainability of
highly subsidized services, such as transport services, pediatric dental
services, or child abuse prevention and treatment services.
- They mean children's hospitals may have to look at delaying service
expansions at a time when the demand for our services is greater than ever.
Conclusion: Work on Medicaid as If It Matters to All Children
In conclusion, I want to emphasize that we welcome your oversight of Medicaid
not only in terms of the integrity of its financing but also, hopefully, in
terms of its performance for providers and the vulnerable populations who depend
on it.
Medicaid's fiscal challenges are, in many ways, directly related to its
success in addressing many disparate health care needs in this country. Yet,
much remains to be done. In many cases, providers are seriously underpaid. And,
we could reduce the number of uninsured children by more than two-thirds -
thereby insuring almost all children - if all children eligible for Medicaid and
the State Children's Health Insurance Program were simply enrolled.
Local funding has had a longstanding role in Medicaid financing in many parts
of the country. There may be a number of policy issues around IGTs and
federal/state differences in ways to resolve them. But in the end, please don't
make changes that have the unintended consequences of removing dollars from the
safety net providers that depend on them. Reducing federal Medicaid funds that
flow to states will ultimately be felt by providers and enrollees alike.
Although federal oversight of the program is an integral element in the
integrity of the financing of Medicaid, it is not time to reduce funding for
Medicaid. Remember, fiscally responsible federal oversight and reducing funding
for the program are two very different legislative exercises. As with past
Congresses, we know you will approach your oversight of Medicaid guided by the
needs of its vulnerable populations and the providers who serve them. It will
affect the future of health care for every child in this country.
Thank you for the opportunity to testify today.
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