Federal law requires states to make disproportionate share hospital (DSH) payments to hospitals that serve high numbers of Medicaid and uninsured patients. The federal government provides an annual allotment to states for this purpose. (Washington’s preliminary allotment for FY 2019 was $212.9 million.)

The Affordable Care Act (ACA) required these federal allotments to be reduced over the FY 2014 to FY 2020 period (after which they would return to their previous levels). However, Congress has acted many times to delay the reductions. The federal coronavirus aid bill that was signed into law March 27 includes another delay (Sec. 3813). Now the reduction in the federal allotments will begin Dec. 1, 2020. With this delay, total federal allotments for all states will be reduced by $4 billion for the period of Dec. 1, 2020 to Sept. 30, 2021 and by $8 billion for each of federal fiscal years 2022 through 2025.

The 2020 supplemental budget, as passed by the Legislature March 12, notes that (at the time) the delay had been extended to May 23, 2020, and the budget assumes “another federal extension.” Thus, the budget assumes savings of $66.0 million in 2019–21 and $161.5 million in 2021–23 (for funds subject to the outlook). The additional seven months of delay now on the federal books mean that the state will definitely realize at least some of those savings.

(More on the federal aid bill here, here, here, here, and here.)