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Updated: Hospitals' charity care funds are cut in latest Christie budget

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Gov. Chris Christie delivers his budget address Tuesday in Trenton.
Gov. Chris Christie delivers his budget address Tuesday in Trenton. - ()

(Editor's Note: This report was updated at 8:50 a.m. Thursday with comments from Christopher J. Santarelli of the state Treasury Department.)

The charity care funds that hospitals use to defray the cost of caring for indigent and uninsured patients are being reduced by $148 million, to $502 million, in Gov. Chris Christie's fiscal 2016 budget. However, the administration said it expects New Jersey's successful Medicaid expansion under the Affordable Care Act to ease the demand for hospitals to provide uncompensated care.

In its budget statement, the Christie administration said 390,000 low-income New Jersey residents have enrolled in the state’s Medicaid program, known as NJ Family Care, since the ACA-funded nationwide Medicaid expansion began Jan. 1, 2014. According to state figures, there are now 1.67 million New Jerseyans enrolled in NJ FamilyCare, which is funded by both state and federal tax dollars.

The Christie Administration budget statement said: “As widely anticipated, Gov. Christie’s decision to expand NJ FamilyCare under the ACA has led to a dramatic increase in federally supported NJ FamilyCare enrollment, as well as a steep reduction in New Jersey hospitals’ documented claims for uncompensated care.”

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The statement said “this fundamental and welcome shift” clears the way for a reduction in charity care funding.

Betsy Ryan, chief executive of the New Jersey Hospital Association, said the hospitals are now assessing the impact of the 22.8 percent charity care funding cut.

"We're very concerned about the charity care cut to hospitals,” Ryan said “While we've made some strides in insuring more New Jerseyans, a new Gallup poll states that 11.7 percent of New Jersey's 8.9 million residents remain uninsured. That's roughly 1 million people that still rely on charity care provided by New Jersey's hospitals. We must continue to fund this vital safety net program to ensure that all New Jersey residents have access to the health care services they need, and to make sure that hospitals are there to provide that care 24/7/365.”

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Ryan applauded Christie for increasing funds to the state’s teaching hospitals to train physician residents: Christie’s 2016 budget increases funding for graduate medical education from $100 million this year to $127.3 million in fiscal 2016, which begins July 1, 2015.

"We are appreciative that the governor recognizes the vital role of teaching hospitals in our state,” Ryan said “Health care redesign depends on an adequate supply of physicians — especially in primary care — and teaching hospitals are their training grounds. It's an essential part of our industry's ongoing work to care for the people of our state."

On the issue of the charity care funding cut, Ryan said: “It's a time of great change in our industry, and we need additional analysis and details to determine the full impact of this budget on hospitals and their patients. We want to be sure there are no unanticipated consequences at this important time in health care.”

More details on the impact of the charity care cuts will be forthcoming once the state Department of Health announces how much charity care individual hospitals will receive in 2016.

State Treasury Department spokesman Christopher J. Santarelli said: "As expected, following the administration’s decision to expand NJ FamilyCare under the Affordable Care Act, there has been a significant drop in the demand for uncompensated hospital care, historically supported through the state-funded charity care program."  

He said that, to complement this rebalancing of health care finance and ensure access to care, this budget recommends a $45 million increase in NJ FamilyCare physician reimbursements and a $27 million increase in support for graduate medical education.

Along with the 390,000 increase in NJ FamilyCare members, another 250,000 New Jerseyans have gotten health coverage through the ACA marketplace, HealthCare.gov, where most qualify for federal subsidies to help them  buy health insurance.  

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Write to the Editorial Department at editorial@njbiz.com

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