A bit of history is helpful here. For decades now, Medicaid has sent states billions of dollars in something called Disproportionate Share, or DSH, payments. These funds, which totaled $11.3 billion in 2011, go to the hospitals that provide a higher level of uncompensated care and are meant to help offset the bills of the uninsured.However, with the Supreme Court ruling that states could opt out of the expansion, all of those 17 million won't be getting Medicaid and those DSH payments are still going to be needed for the hospitals. The hospitals that provide that care have been fighting to get their governors and legislatures to take the Medicaid expansion, and failing that lobbying the White House to reverse the cuts. So that money is still, unfortunately, going to be necessary.
At first, the health law appeared to make DSH payments unnecessary. When the Affordable Care Act expanded Medicaid to 17 million Americans, it would significantly reduce the burden of unpaid bills on health-care providers.
Restoring that money is important, but it's also a problem in actually getting as many of those 17 million people onto Medicaid. If that money is restored, it means less incentive for states who are holding out on expansion. It's not as much money as the expansion would bring them, but it means governors won't be on the hook for figuring out how to help struggling hospitals.