Community Health Centers: Recent Growth and the Role of the ACA

Community health centers are the nation’s largest source of comprehensive primary care for medically underserved communities and populations. Under the Affordable Care Act (ACA), increased patient revenues due to the expansion of Medicaid and private health insurance, along with substantially increased direct federal investment in the program, have led to growth in the number of health centers and their capacity to provide services. This brief draws on 2015 federal data on health centers and our 2016 Survey of Health Centers’ Experiences and Activities under the Affordable Care Act to provide a snapshot of health centers and their patients, analyze recent changes, and compare the experience of health centers in Medicaid expansion and non-expansion states. This information is germane to the impending debate on the ACA and the potential impact of changes on coverage and access to care for low-income Americans and financing for safety-net providers. Key findings include:

• Health centers are a core source of primary care in the U.S., particularly for Medicaid beneficiaries and uninsured people. In 2015, 1,375 health centers provided care to 24.3 million patients, including 1 in 12 U.S. residents and nearly 1 in 6 Medicaid enrollees. Almost three-quarters of all health center patients had income below the poverty level.
• Health center patients are increasingly insured, primarily due to the ACA Medicaid expansion. In 2015, 76% of health center patients were insured (49% through Medicaid), up from 65% in 2013, the year before the ACA coverage expansions took effect. State Medicaid expansion decisions made a large difference in coverage. Over half of health center patients in expansion states had Medicaid, compared to one-third in non-expansion states. About 1 in 5 health center patients in Medicaid expansion states remained uninsured, compared to 1 in 3 in non-expansion states.
• The Medicaid expansion strengthened health center finances and capacity. Health centers in Medicaid expansion states reported higher total operating revenues than those in non-expansion states, and Medicaid provided a larger share of their revenues. On average, health centers in expansion states served 40% more patients than those in non-expansion states, reported higher staffing ratios for oral and behavioral health care, and were more likely to report increased capacity to provide services. Workforce recruitment and retention are leading challenges for health centers, especially in Medicaid expansion states.
• Health centers report increased numbers of insured patients who are unable to pay their deductibles and cost-sharing. Nearly two-thirds of health centers in non-expansion states reported an increase in insured patients who could not afford their deductibles and cost-sharing, and over half reported an increase in the share of their privately insured patients who pay sliding fees. The share of health centers in expansion states reporting these trends, though significantly smaller, was also substantial.
• Federal grant funding remains essential to support health centers. In 2015, federal grants provided close to 20% of health center revenues. This funding enables health centers to finance care for uninsured patients, subsidize insured patients unable to afford their deductibles and copays, and finance services not covered by insurance. Over 70% of federal health center grant funding is from the health center trust fund set up by the ACA.
• If the ACA were repealed, ending the Medicaid expansion and the health center trust fund, health centers would be challenged to sustain their operations. Increased numbers of uninsured patients, together with both the loss of Medicaid revenues associated with the Medicaid expansion and most federal grant funding, would be a severe financial shock to health centers and likely leave them unable to sustain their operations and capacity at current levels. The contraction of health centers would likely leave the most medically underserved urban and rural communities in the nation – for which the health center program was created – with reduced access to comprehensive primary health care.