Funding Priorities in the ACA

September 17, 2012

Much of the discussion and press coverage of the Affordable Care Act (ACA) has been focused on provisions related to the expansion of coverage: the individual mandate, the Medicaid expansion, and to a lesser degree, health insurance exchanges. These provisions don’t go into effect until 2014.

Other important parts of the ACA are already in place, and already making a difference in people’s lives across the country. Key coverage pieces—like the ability of young people to stay on their parents’ coverage to age 26—have been covered in the press, and are important in reversing an upward trend in the number of uninsured in this age category. Provisions that eliminated lifetime caps on benefits, added preventive care services to Medicare and commercial benefit plans, closed the donut hole in drug coverage for seniors, and rebated “unreasonable” premium increases helped many get and keep coverage for important services.

Beyond those provisions—the ones you are most likely to read about in the press—there are other less well-known provisions that are also important to the aims of the law. In particular, the ACA devotes considerable funding to grants and demonstration projects, some of which went into effect shortly after passage of the law. As passed in 2010, the ACA included a little more than $100 billion in mandatory spending from fiscal years 2010 to 2019; $3.6 billion of that spending had been awarded in grants by the end of 2011.

Looking at which ACA provisions included appropriations for mandatory spending (spending that requires no further Congressional approval)—and which did not—can shed light on how the law ties together as a comprehensive reform of the U.S. health care coverage and delivery system. We at CHRT were interested in understanding the funding priorities, so we’ve been tracking grants and demonstration project spending in the U.S. overall and in Michigan specifically.

This week, we published our issue brief on spending for the first two fiscal years the ACA has been in effect.

The first two years of spending on grants and demonstration projects tells us the framers of the law understood that expanding coverage would also require strategies to ensure enough capacity in the system to treat those newly insured. Indeed, nationally and in Michigan, the top spending category in 2010 was the health care workforce, and in 2011, health centers. Funding went for training programs (for nurses and primary care practitioners) and expansion of federally qualified health centers. These funding priorities show the framers understood that coverage alone is not enough to provide access to care.

The investment in community health centers is particularly important because of law’s emphasis on Medicaid expansion. There is some debate about whether or not we need more primary care physicians overall, but there is no debate about the need for more capacity in primary care to serve the Medicaid population. Community health centers are truly essential to delivering on the ACA’s promise of improved care for the population at large.

Over the next few years, grant and demonstration funding priorities will shift to initiatives aimed at improving the quality and efficiency of care.

A side note on our funding brief: several states that received funding for coverage expansion (as noted in our issue brief) later returned that funding for political reasons; specifically, the states of Oklahoma, Kansas, and Wisconsin. Those changes won’t appear in our analysis until our review of fiscal 2012 funding.

Perhaps after the election, and assuming the ACA stays in effect, the amount of state volatility will stabilize. It would certainly be a shame if citizens of some states did not receive the benefit of federal support for these important initiatives and programs.