- $3.8 billion in federal and local funds.
- 1% increase from FY 2018 after adjusting for inflation.
- Fails to fund reforms to DC Healthcare Alliance Program.
- $4.4 million for new components of the School Health Services Program.
- $7 million increase for behavioral health.
- Important Affordable Care Act stabilization provisions, including an individual mandate for health coverage.
The District has a variety of programs aimed at improving health and health care access for District residents. The following agencies run these programs:
- The Department of Health (DOH) manages public health programs like school nursing, HIV/AIDS prevention and screening, maternal and child health home visiting programs, and some nutrition programs.
- The Department of Health Care Finance (DHCF) manages the District’s public health insurance programs like Medicaid and the DC Healthcare Alliance. These programs provide health insurance for low-income residents and are a large reason why the District has near universal health coverage.
- The Department of Behavioral Health (DBH) funds and manages behavioral health and substance use disorder clinics throughout the city. The agency also operates mental health programs in schools and the District’s psychiatric hospital, St. Elizabeths.
The proposed fiscal year (FY) 2019 budget for these agencies totals $3.8 billion in gross funding, including both federal and local sources. This represents a 1 percent increase, or nearly $47 million, from the FY 2018 budget after adjusting for inflation (Figure 1). General funding, which includes local funds, dedicated taxes and special purpose revenue, will increase by 5 percent, or $59 million when adjusted for inflation.
In addition to DOH, DHCF and DBH, other agencies have health-related provisions in the FY19 budget. These include the Department of Human Services, the Office on Aging, and the Department on Disability Services. These agencies, along with the Department of Health Care Finance and Department of Behavioral Health, stand to receive a combined $3.2 billion in federal Medicaid payments; nearly 99 percent of which is attributable to the Department of Health Care Finance. The Office of the Chief Financial Officer, which provides financial management services to the DC government and residents, has a role in the FY19 health budget as well – which will be highlighted later.
The District also budgets for the DC Health Benefit Exchange Authority—a fund outside of the District’s general operating budget, which is not reflected in the totals above. The Exchange operates DC Health Link, the District’s online portal for health insurance plans and financial assistance for those plans. The Exchange’s funding for FY 2019 is $31 million, an 8 percent ($2.6 million) decrease from last year, adjusted for inflation.
Health Coverage in the FY 2019 Budget
The proposed FY 2019 budget for the Department of Health Care Finance (DHCF) is $3.3 billion, a $25 million or 1 percent increase from FY 2018 when adjusted for inflation. DHCF has the largest budget of all DC agencies, accounting for nearly 23 percent of the District’s $14.4 billion total budget.
A substantial portion of District residents receive their health coverage through programs provided by DHCF. About 259,000 residents receive health care through the District’s Medicaid program, as well as nearly 20,000 children and adults covered through the District’s DC Healthcare Alliance program and Immigrant Children’s Program (ICP). Since the implementation of the Affordable Care Act (ACA), enrollment growth in the District’s Medicaid program is now more than double pre-ACA levels.
Like all states, the District is required by the federal government to provide a set of certain “mandatory” services, including inpatient hospital services, nursing home care, and emergency services. Additionally, the District chooses to provide an array of “optional” services for DC’s Medicaid beneficiaries, including mental health services, home health services, and personal care aides.
Overall, FY 2019 budget changes for DHCF are largely the result of several drivers, including increased personnel services, increased fixed costs, provider payments, and the DC Access System (DCAS) project.
- Provider Payments: DHCF’s FY 2019 budget calls for an increase of $40.8 million in local funds due to projected growth in enrollment and increases in provider rates. DHCF anticipates an 8 percent increase in enrollment to the Elderly and Persons with Physical Disabilities (EPD) waiver program, and a 7 percent increase in enrollment for the District’s Medicaid expansion population. The main drivers of overall Medicaid spending include primary and acute care (59 percent), and long-term care (31 percent).
- DCAS: The FY 2019 budget includes $63 million in federal, local and intra-district operating funds for a new division under DHCF dedicated to implementing the DCAS, the new eligibility system that will serve as the platform to provide DC with a modern integrated eligibility system for multiple public programs when completed. DCAS will also replace ACEDS, the District’s legacy eligibility system. The DCAS project was transferred from the Department of Human Services (DHS) to DHCF in FY 2019. DHCF is working to implement the last phase of the DCAS project, slated to end in FY 2021. The project receives an enhanced match from the federal government for funding; the District receives 90 cents back for every dollar it spends.
DHCF Has Other Notable Increases in Its FY 2019 Proposed Budget:
- Physician Supplemental Payment. DHCF’s budget will also include $1.35 million in one-time Local funds for a Physician Supplemental Payment in Wards 7 and 8. These funds will help mitigate Medicaid losses for group practices that agree to provide certain health care services in Wards 7 and 8.
- Services for DDS and DBH clients. In Intra-District funds, DHCF’s budget includes an increase of $10.3 million based on Memoranda of Understanding (MOUs) with the Department of Behavioral Health and the Department of Disability Services to provide Medicaid services to beneficiaries served by those agencies.
- DC Healthcare Alliance Program. DHCF’s budget includes an increase of $11 million due to continued increases in per-person costs for the DC Healthcare Alliance program (discussed in detail on pg. 4).
- PACE Program. The DHCF budget includes $173,053 for the Program of All Inclusive Care for the Elderly (PACE), which provides care integrating Medicaid and Medicare benefits for beneficiaries age 55 and older who are in need of nursing home level care but are not able to live in a community-based setting. The program is slated to launch in late FY 2019 or early FY 2020. The program will launch a single site serving approximately 200-300 individuals in Wards 7 and 8.
There Are Several Decreases in Health Care Spending for FY 2019:
- Hospital Provider Taxes. The budget includes a decrease of nearly $13 million in dedicated taxes due to the expiration of provider taxes. These taxes were collected from District hospitals in FY 2016 and FY 2017 and help maintain reimbursement rates to hospitals for in-patient services for the District’s “fee-for-service” beneficiaries. These are hospital services for Medicaid beneficiaries not in the city’s managed care program—largely elderly residents or residents with disabilities or chronic conditions. The District reimburses hospitals for 98 percent of the costs, far above the national average of 87 percent. In FY 2018, the tax allowed the District to receive federal Medicaid matching funds of $33 million. DC Council should restore these taxes to help maintain reimbursement rates and access to care.
- Healthy D.C. Fund. The budget also includes a decrease of about $6 million, due to decreased spending in the Healthy D.C. fund. This fund receives revenue from a tax on health insurance companies that operate in the District. The decrease is due to reductions in revenue projections and availability of fund balance.
- Disproportionate Share Hospital Payments. The budget includes a decrease of $1.4 million in disproportionate share hospital (DSH) payments. DSH payments are allotments from the federal government to qualifying hospitals that serve many Medicaid beneficiaries and uninsured individuals. The District has previously seen reductions in DSH payments due to the Affordable Care Act. Under the federal law, DSH payments are reduced over time as increased health coverage rates lessen hospitals’ uncompensated care burdens. In FY 2019, however, DSH payments will be reduced for United Medical Center due to the closure of its obstetrics unit.
- Medicaid Managed Care Organization Rate Savings. The budget includes a decrease of $4.5 million in local funds through a proposed 4 percent rate reduction for Medicaid Managed Care Organizations (MCOs).
Some Concerns with the FY 2018 Budget for Health Coverage:
Nearly $95 Million in Annual Expenses for Fee-For-Services Beneficiaries Were Potentially Avoidable in 2015 and 2016. The Department of Health Care Finance (DHCF) assesses the efforts of health plans to coordinate care and has a goal of achieving high value in health care for beneficiaries. Currently, there are three health plans that serve District Medicaid and DC Healthcare Alliance beneficiaries in managed care programs. DHCF found that nearly $95 million in fee-for-service expenses in 2015 and $94 million in 2016 were potentially avoidable.
Most of these costs are driven by potentially preventable hospital admissions, followed by 30-day hospital readmissions – when a patient returns to a hospital within 30 days of a prior hospitalization. As DHCF continues monitoring and assessing health plan performance and pay-for-performance initiatives, it will be important to note whether future savings are realized.
No Change to Rules that Restrict Access to Health Care for Immigrants, But a Small Boost for Re-enrollment Services:
The DC Healthcare Alliance program provides health insurance coverage to low-income residents who are not eligible for Medicaid. In 2010, the Affordable Care Act allowed DC to move many Alliance participants to Medicaid, giving participants access to a more comprehensive package of services and allowing the city to rely more on federal funds for health care. As a result of that shift, participants in the Alliance are largely immigrants who are ineligible for Medicaid under federal law, including undocumented immigrants and documented immigrants who have not yet met the 5-year waiting period for federal benefits.
While the DC Healthcare Alliance plays a critical role in ensuring access to care for DC residents, program rules implemented in 2011 have made it hard for eligible residents to maintain their health coverage, leading to a substantial drop in participation. Despite clear indications of this problem, the FY 2019 budget fails to fund legislation passed unanimously by the DC Council that would reduce barriers to the DC Healthcare Alliance Program and increase program enrollment by 6,000 residents.
Since October 2011, the program has required participants to have face-to-face interviews every six months at a DC social service center to maintain their eligibility. This has proved to be a barrier for eligible residents trying to maintain Alliance coverage. Enrollment in the Healthcare Alliance declined sharply in 2012, and has largely remained unchanged since then (Figure 2). During the first year of the policy from October 2011 to October 2012, the number of DC residents in the Alliance dropped by one-third, from 24,000 to 16,000. Enrollment has fluctuated modestly since then, but currently stands around 16,000, despite continued growth in the District’s population.
The intent of the six-month re-enrollment requirement was to discourage ineligible people from applying for the Alliance, but evidence suggests that it is creating a barrier for eligible enrollees to maintain coverage under the program. Previous data analysis by DHCF indicates that Alliance beneficiaries are less likely than Medicaid beneficiaries to retain coverage after their respective coverage periods end (Medicaid enrollees are covered up to one year and can re-apply online, unlike those in Alliance). At the same time, Alliance beneficiaries are more likely than Medicaid beneficiaries to eventually regain coverage after they lose it. What these findings suggest is that for many Alliance beneficiaries, the re-enrollment barriers make lapses in coverage more likely, even for those who still want—and try—to maintain coverage.
The six-month recertification requirement also creates problems for other residents seeking public benefits. Alliance applicants represent a large share of residents at DC’s five social service intake centers each day, and their applications take longer than the average visit to these centers. The Alliance recertification rules thus contribute to long lines and wait times—and to clerical errors such as lost paperwork—at the social service centers. Data collected in 2015 suggest that Alliance recipients make up one-fourth of service center traffic in a given month, even though they represent a very small portion of service center clients, and less than 7 percent of individuals covered under DC’s health insurance programs.
Funding for the DC Healthcare Alliance in FY 2019 is about $77 million, a 17 percent increase from last year adjusted for inflation (Figure 3). The increase does not reflect an anticipated increase in enrollment, or notable changes in how the program is delivered. Instead it merely reflects an increase in per-participant costs, following on a substantial increase in FY 2017. If current trends continue, the Alliance program can anticipate upwards of $90 million in programmatic costs for FY 2020.
The budget allocates an additional $715,000 to the Department of Human Services budget, which will go toward increasing the number of social service representatives at five service center locations and adjusting hours to meet customer demand. While these modifications are helpful, they will not solve the problem. DC Council should fund the legislation, at a cost of $17 million, and improve our immigrant neighbors’ access to health coverage and care.
Public Health in the FY 2019 Budget
The FY 2019 budget for the Department of Health (DOH) is $251 million, a nearly $15 million and 6 percent increase from FY 2018 after adjusting for inflation. This increased funding comes in large part from the District’s general fund.
DOH Includes Funding in the FY 2019 Proposed Budget for Many Programs:
- Home Visiting. The budget includes $1.5 million in federal grant funds through the Maternal and Infant Early Home Visiting program (MIECHV), a federal program that supports evidence-based home visiting programs across the United States. Additionally, the budget includes a $60,000 Innovation Grant through MIECHV, which will support training for best practices in home visiting. For more on the District’s early childhood budget for FY 2019, see DCFPI’s Early Childhood Development toolkit.
- Preventing Violence Against Women. The FY 2019 budget for DOH includes a $460,605 federal grant for implementing the Violence Against Women Act. This grant will help strengthen services to survivors of domestic violence, dating violence, and sexual assault by bolstering services available to victims and holding offenders accountable.
- School Health. The budget includes $4.4 million to support new components of the School Health Services Program (SHSP). For more on the District’s education budget for FY 2019, see DCFPI’s PreK-12 Education toolkit.
- Improving Birth Outcomes. An increase of $1.6 million in DOH’s budget will support a preterm birth prevention pilot program, aimed at decreasing preterm births and improving the health of District infants. DOH will pilot with two birthing facilities to implement a two-year demonstration project.
- Defending Access to Health Care. The FY 2019 budget includes $107,000 for DOH to fund Defending Access to Health Care – recent Council legislation that requires insurers to cover certain health care services for women under the ACA without cost-sharing, including breast cancer screening and counseling, contraception, screenings for HIV, and counseling for sexually transmitted diseases.
- Rodent Abatement. An increase of $906,603 in the DOH budget for FY 2019 in one-time funds will allow the agency to perform proactive inspections and quickly re-inspect areas with observed rodent activity.
Mixed Funding Pictures in the FY 2019 Budget for Public Health:
- Pregnancy Prevention. The budget removes $666,219 in one-time funding that supported a teen peer sexual health educators’ grant in the Community Health Administration (CHA), but includes $735,000 to support Florence Crittenton Services for pregnancy prevention activities for teen and young adult women in Wards 5, 7 and 8.
- Disease Prevention and Services for Persons Living with HIV/AIDS. The FY 2019 budget for DOH includes $350,480 within the HIV/AIDS, Hepatitis, STD, and TB Administration that will go toward the Health Department Demonstration Projects for Comprehensive Prevention, Care, Behavioral Health, and Social Services for Men Who Have Sex With Men of Color At Risk For And Living With HIV Infection. Moreover, the budget includes $103,498 in private grant funds that will allow DOH to develop a replicable model program on best practices in HIV and/or hepatitis B and C screening and linkage to care. At the same time, the Administration will see a reduction of $194,443 due to a reduction in funding to community-based providers for HIV prevention services, as well as a reduction of $50,000 for burial assistance under the Ryan White Program, a program that provides HIV-related health services.
- Tobacco Prevention and Cessation. The FY 2019 budget for DOH does not include $674,000 in funding needed to implement recently enacted legislation from the DC Council, which increases the smoking age to 21 in the District. Nor does it include in the proposed Budget Support Act the recently introduced legislation that would increase the District’s tobacco tax by $2 per pack, boost funding for smoking cessation services and supports, and fund the smoking age law. This legislation is estimated to generate at least $5 million in new revenue and would help reduce tobacco use by DC’s youth over time. DC Council should include this legislation in the Budget Support Act to improve public health.
Behavioral Health in the FY 2019 Budget
The FY 2019 budget provides a much-needed boost to the Department of Behavioral Health (DBH) so that the agency may better serve District residents. The FY 2019 budget for DBH is $285 million, a $7 million, or nearly 3 percent, increase from last year after adjusting for inflation. It is funded primarily through local funds.
Mental Health Rehabilitative Services (MHRS) local spending will increase nearly $5 million in the FY 2019 budget after adjusting for inflation. The increased funding will help provide more mental health rehabilitation and substance use disorder services to District residents.
Major Funding Initiatives in the FY 2019 Budget:
- School Based Mental Health. In the FY 2019 budget, $3 million is included to improve and expand services for the DBH School Mental Health Program (SMHP). This funding is the result of recommendations from the Task Force on School Mental Health. Under the Task Force’s recommendations, DBH clinicians will continue providing a range of services at their already-assigned schools. Through increased partnership with community-based organizations, SMHP will be further expanded to provide services to the District’s highest need schools. The $3 million in funding is comprised of $1.9 million in grants to be awarded to community-based behavioral health providers, which will support clinicians and clinical supervisors for billable clinical services and non-billable interventions and supports. These include parent and teacher consultation, school team meetings, care coordination, and crisis management. $524,000 will be devoted to developing a Community of Practice, which will help providers and schools to begin implementing the multi-tiered model. Lastly, $125,000 will support an evaluation of the first year of implementation. The DBH SMHP offers mental health support to youth, families, teachers and staff in DC’s public and public charter schools to reduce behavioral health-related barriers to learning. To date, the program has provided prevention, early intervention and treatment services to 57 schools in DC.
- Increasing Bed Capacity at St. Elizabeths Hospital. St. Elizabeths, the state psychiatric hospital for the District, will see an increase of $2 million to increase its bed capacity and reduce wait time. St. Elizabeths Hospital has experienced a 60 percent increase in pre-trial admissions over the past two years, affecting the hospital’s ability to admit patients in a timely manner for court-ordered forensic evaluations.
- Pre-Arrest Diversion Program. DBH will receive $1.6 million as a part of a criminal justice diversion program. This multi-agency collaboration will help divert individuals arrested or suspected of low-level drug offenses into social and behavioral health services, instead of the criminal justice system.
Reductions in the FY 2019 Budget for Behavioral Health:
- Pharmaceutical Services. DBH will save nearly $300,000 in pharmaceutical services at the DBH pharmacy located at 35 K Street Northeast. DBH will work closely with health providers on benefits coordination so that medications are provided only to uninsured individuals where the DBH pharmacy is a last resort.
- Professional Services. In FY 2019 DBH plans to decrease its use of professional contractual services by about $322,000, relying more on its internal workforce. This includes using DC’s Fire and Emergency Medical Services (FEMS) for consumer transport to area hospitals, instead of on contractual ambulance services.
Insurance Market and Reforms in the FY 2019 Budget
The FY 2019 Budget Includes a Local Health Insurance Mandate to Prevent Market Instability
The Mayor’s FY 2019 proposed budget moves forward with a District-wide individual health insurance mandate, which will help protect insurance coverage affordability and prevent more residents from becoming uninsured. This proposal comes from a recommendation by the Affordable Care Act Working Group, through the DC Health Benefit Exchange Authority (HBX). HBX, which runs DC’s local ACA insurance marketplace called DC Health Link, was asked by the Mayor to reconvene the Working Group this January and develop recommendations to protect DC’s coverage gains amidst federal changes.
These recommendations address several federal actions that many worry could threaten DC’s insurance market stability. In October 2017, President Trump issued an Executive Order that expanded access to two forms of health coverage – association health plans and short term limited duration plans – which offer less coverage and can deny coverage or charge higher prices to people with pre-existing conditions in exchange for lower premiums. These plans tend to attract healthier consumers away from the regular insurance risk pool, which in turn raises insurance premiums for everyone else, and can threaten peoples’ access to comprehensive coverage. The repeal of the ACA’s individual mandate in December’s tax bill compounds this issue by encouraging more people to forego coverage, which will drive up costs further.
The ACA Working Group’s recommendations include a DC-level mandate that would largely mirror the federal government’s and would maintain federal exemptions to the mandate like exemptions for those experiencing homelessness or facing eviction. Additionally, DC residents with incomes under 200 percent of the federal poverty level, as well as those who qualify for Medicaid or other public health coverage programs like the DC Healthcare Alliance program, would also be exempt. Penalty amounts would be no more, and in some cases less, than they would be under federal law for the 2017 tax year. And for the 96 percent of District residents who already have health coverage, this recommendation presents no change. Should the federal government reconsider an individual mandate in the future, DC residents would not be subject to both. If the DC Council and Mayor adopt the proposed local mandate, the District would become the second jurisdiction in the nation to adopt a state-level mandate.
Funding for the individual mandate is comprised of $1.1 million; $551,000 will support the Office of the Chief Financial Officer’s (OCFO) Tax Administration and Information Technology programs, which will allow the OCFO to make needed changes to the District’s tax code and publicize the changes for tax filing. An increase of $549,000 will cover technology services in Information Technology related to the mandate.
What the FY 2019 budget does not fund, however, are other recommendations from the Health Benefit Exchange Authority’s Affordable Care Act Working Group, including ways to reduce the cost of health insurance for lower- and moderate-income District residents up to 400 percent of the federal poverty level. DC Council should include more investments to bring down costs for residents.
Funding for the DC Health Benefit Exchange Authority Maintains Access to Critical Services While Boosting Outreach
The FY 2019 budget includes $31 million for the DC Health Benefit Exchange Authority (HBX), which operates DC Health Link. DC Health Link is the District’s online portal for applying to Medicaid, which includes private health insurance plans and financial assistance for those plans. This budget is an 8 percent increase from FY 2018 after adjusting for inflation, which maintains the funding needed for the agency’s operations for DC Health Link.
The Exchange generates funds through a broad-based assessment on health insurance plans operating in the District. The largest shares of its budget are devoted to information technology (IT) operations, assistance to help consumers access insurance and benefits through the Exchange. HBX is now in its fifth year of operation and concluded its fifth open enrollment period for people purchasing individual coverage in February 2018. As of December 31, 2017, DC Health Link had about 18,000 residents enrolled in its individual market, and roughly 76,000 people covered through its Small Business (SHOP) Marketplace.
HBX’s proposed budget for FY 2019 includes approximately $500,000 for consumer education and outreach. This added funding will help offset federal cuts to health coverage outreach and enrollment efforts, which previously helped direct residents to DC Health Link to find their health coverage options.
Since it first opened, DC Health Link has served nearly 300,000 individuals, including 43,000 DC residents enrolled in private coverage, 78,500 enrolled through the small business marketplace (SHOP), and 177,000 residents who have been found eligible for Medicaid. Moreover, DC Health Link has been able to reap the benefits of its early investments, including a first-of-its-kind state partnership with Massachusetts where DC Health Link provides the technology and operational support for the Massachusetts SHOP marketplace. DC Health Link was recognized in 2017 as the top exchange marketplace in the country for its consumer comparison shopping tools.
Health Care Facilities in the FY 2019 Budget
The FY 2019 capital budget includes several initiatives to boost access to health services in the District – including support for United Medical Center and plans for a new medical center in FY 2023.
The FY 2019 capital budget includes $300 million for the construction of a new medical center, replacing United Medical Center (UMC) and creating an integrated health system east of the Anacostia River. In FY 2018, fiscal pressures required $23.7 million to support UMC hospital operations. For the FY 2019 proposed budget, $10 million in Local funds is allocated to support UMC operations.
The $300 million will cover a six-year capital funding plan (Figure 4). In FY 2019, funding will go to creating the initial infrastructure needed to support the medical center, replacing the adjacent men’s shelter on the St. Elizabeth’s campus, and building permanent parking for the Washington Wizards basketball team’s new practice center, slated to open later this year (a portion of the land serves as temporary parking amid the stadium’s construction). The new hospital will include 100 to 150 beds and will support a variety of services. Further details are dependent on the private-sector partner involved, a decision that the city will announce in the coming months.
During this time, there will be an additional $14.3 million in the FY 2019 capital budget invested in improvements for United Medical Center until FY 2022, just before the new medical center is slated to open in FY 2024.