3 Ways H.R. 1 Puts Kids’ Health Care at Risk

The word “children” appears only 19 times in H.R. 1, the House of Representative’s version of the budget reconciliation bill.

But make no mistake; proposed changes to three Medicaid policies within H.R. 1 will threaten all children’s access to health care.

A financial chain reaction

If enacted, the Medicaid cuts will start a chain reaction, resulting in fewer doctors and nurses, longer wait times, and sicker kids.

Medicaid is financed by the federal government and states. H.R. 1 calls for changes to the ways states finance the non-federal share of the program. Limiting the ways states finance their Medicaid programs will force state leaders to make difficult funding decisions.

Those changes will cascade to hospitals and health care providers. The consequences will be particularly bad for children’s hospitals where an average of 50% of patients have Medicaid. At some children’s hospitals, 70-80% of patients are Medicaid beneficiaries.

If Medicaid reimbursements decrease, children’s hospitals could be forced to scale back programs and services. This would prevent all children — not just those on Medicaid — from accessing the specialized health care services provided by children’s hospitals.

Three proposed changes in H.R. 1 will negatively impact children:

1. State-directed payments reductions

State-directed payments are a critical source of financial support for children’s hospitals, accounting for 39% of their Medicaid funding and 15% of overall operating resources. These payments help mitigate the shortfall between base Medicaid payments and the actual cost of care.

The provisions in H.R. 1 reduce any new state-directed payments to Medicare levels, which do not work for pediatrics since most children are not covered by Medicare. Plus, locking in existing payments at current levels reduce their value by 31% at the 10-year period.

2. Provider tax moratorium

H.R. 1 includes a provider tax moratorium that reduces flexibility states need to address urgent needs, including care gaps for children. Many states use provider taxes to fund their Medicaid programs and to support providers that treat a high percentage of Medicaid patients, such as children’s hospitals.

Children’s hospitals in most states pay provider taxes. This funding stream represents critical foundational support for children’s access to needed care and the care specifically provided by hospitals.

3. Retroactive coverage limits

Currently, children’s hospital patients receive 90 days of retroactive Medicaid coverage from when they apply for Medicaid. H.R. 1 seeks to reduce the retroactive coverage window to 30 days. This policy would impact some babies in the NICU, children admitted to the hospital following a traumatic accident, and children with medical complexity. The change means families are forced to worry about paperwork and costly medical bills when they should be able to focus on their child’s care.

Take action now

The Senate is considering their version of H.R. 1 now. We must tell senators these policy changes will threaten children’s access to highly specialized care at our nation’s children’s hospitals. Tell your senators this bill will hurt children’s hospitals and the patients they serve.