Recession, increase in uncompensated care severely strain Michigan’s health care safety net, says Center for Healthcare Research & Transformation

August 30, 2013 | Publication

A report released today by the Center for Healthcare Research & Transformation (CHRT) outlines the severe impact of Michigan’s recession on the ability of the health care safety net to provide health care to the growing number of Michigan residents who need their services.

From 2007 to 2011, uncompensated care provided by Michigan hospitals increased 42 percent, and patient volume at federally qualified health centers (FQHCs) increased by 22 percent. The number of uninsured increased by 133,000, yet there was no net increase in the number of free clinics statewide. In fact, five of seven free clinics in the Upper Peninsula closed, leaving just two clinics for the entire population.

“These trends emphasize how important the Medicaid expansion in Michigan is in terms of access to care,” says Marianne Udow-Phillips, director of CHRT. “The demand for low and no cost care through federally qualified health centers has increased in Michigan. At the same time, some free clinics in the state have closed anticipating that Medicaid will expand. If the expansion does not occur, there will be further pressure on the FQHCs in the state to provide access or more care will likely be delivered at the nearest emergency room, further escalating the rate of uncompensated care that hospitals provide.”

The strain on the health care safety net results in cost shifting to private insurers, higher premiums, and a continuation of the cost/access challenges evident in Michigan and nationwide, says Udow-Phillips.

CHRT’s review of Michigan’s health care safety net includes additional findings, such as:

  • The Medicaid coverage rate increased steadily from 12.2 percent of the population in 2007, to 17.5 percent in 2011.
  • The number of patient visits for medical, dental, substance use and mental health care at FQHCs increased from 1.6 million in 2007 to nearly 2 million in 2011.
  • At FQHCs, mental health visits increased by 128 percent, far surpassing the increased visits for dental care (36 percent), medical care (21 percent) and substance use services (11 percent).
  • While the total number of free clinics remained at 75 across the state, the geographic distribution changed greatly. Southeast and Southwest Michigan saw increases in the number of free clinics, yet the Upper Peninsula lost seven of nine clinics.

The report also points to the gradual reduction of disproportionate share hospital (DSH) payments as a challenge for hospitals. These federal funds help compensate hospitals that care for a higher proportion of uninsured patients. Beginning in fiscal year 2014, these payments will be reduced and will eventually cease.

This publication is the fourth in the Cover Michigan 2013 series. Future publications will cover other aspects of health care in Michigan.