Future Brings Financial Challenges in Health Care

UAMS Chancellor Dan Rahn (second from right) leads a video conference discussion about the effects of possible Medicaid changes and federal budget cuts. 

UAMS board members and supporters from sites around Arkansas participate in the Dec. 11 discussion led by Chancellor Dan Rahn.

Dec. 12, 2012 | The state’s only academic health sciences center could lose more than $35 million in funding reductions that would affect its patient care services, research and educating tomorrow’s medical professionals, its chancellor said recently.

But those cuts could be offset by new revenue from privately insured individuals and Medicaid if it is expanded under the federal Affordable Care Act.

Dan Rahn, M.D., chancellor of the University of Arkansas for Medical Sciences (UAMS), spoke of the funding challenges and opportunities in the coming years in a Dec. 11 video conference with16 UAMS sites across the state.

“There is an enormous amount of uncertainty in all of these arenas. Right now it is extremely difficult for us to plan,” Rahn said.

The impending cuts would be brought about by issues at the state and federal level, he said. Should the U.S. Congress not produce a required deficit reduction bill by January, it would trigger across-the-board automatic spending cuts, called sequestration cuts, which would reduce federal funding to UAMS for research and patient care by $12.2 million.

“If a budget compromise is reached, it might be better or it might be worse. We just don’t know,” Rah said. “So whatever happens, we are dealing with a very real possibility of reduction for our current scope of services beginning Jan 1, 2013.”

Another $22 million in cuts would result from implementation of the Affordable Care Act. Since the act assumes there won’t be any uninsured people in the future, UAMS would lose funds it receives now for providing a disproportionate share of care to the uninsured.

There is also the prospect of several million dollars in funding cuts for graduate medical education, Rahn said.

On the state level, when the Legislature meets beginning in January, it will decide whether to expand Medicaid as allowed under the Affordable Care Act and how to implement the insurance exchange under which individuals could buy health insurance.

Medicaid expansion alone could provide UAMS $42 million in new revenue, Rahn said. And if the insurance exchange is fully implemented, there would be new revenue from privately insured individuals.

But no one knows how many people will opt to buy private insurance or how many will decide to pay the penalty in lieu of that.

Rahn urged his listeners to become informed on the issues and participate in discussions as the issues continue to unfold in Congress and in the Arkansas General Assembly.

He said that as a physician, he knows that there is a personal and societal cost to people being uninsured, “so I believe getting coverage is important.”

Despite the financial pressures, he said he wants UAMS to increase its value to the public and continue to grow its mission of working for better health and health care for Arkansas and beyond.

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