Unforeseen policy effects on the safety net: medicaid, private hospital closures and the use of local VAMCs

Social Inequalities, Health and Health Care Delivery

ISBN: 978-0-76230-957-3, eISBN: 978-1-84950-172-9

ISSN: 0275-4959

Publication date: 13 November 2002


Medicaid, Medicare, and managed care reimbursement changes since the early 1980s have put added financial pressure on hospitals, increasing fears that private hospitals will decrease support for indigent care and that those hospitals that serve a disproportionately large indigent population may be forced to close. Wilson and Kizer (1997) use the term “safety net” to convey the notion that public health facilities, such as Veterans Affairs Medical Centers (VA), municipal hospitals, community health centers, and local public health departments, are providing uncompensated care for an increasing number of uninsured due to increasing cost pressures on private health facilities. Other research efforts also give evidence of increasing patient demand pressures on public health facilities in recent years (Lipson & Naierman, 1996). However, these efforts are often cross-sectional in design or limited to information from only one or a few health facilities in a metropolitan area (Baxter & Mechanic, 1997). As such, it is very difficult to measure fully the extent to which new legislation and private market changes have an effect on the public health “safety net” over time.This research considers the longitudinal relationship between the effect of Illinois implementation of the ICARE Medicaid reimbursement program, private hospital closings and the demand for VA inpatient services in a large metropolitan market in Chicago in the 1980s. Analysis is conducted with a combination of VA hospital discharge data, zip code level sociodemographic data from the U.S. Census, and data on hospital closures in the Chicago area between 1980 and 1990. The combined data allow for a longitudinal analysis of the tradeoffs between new state policy and hospitals over the provision of care for the indigent, including the effects of changes in reimbursement for Medicaid patients.


Gifford, B., Manheim, L. and Cowper, D. (2002), "Unforeseen policy effects on the safety net: medicaid, private hospital closures and the use of local VAMCs", Jacobs Kronenfeld, J. (Ed.) Social Inequalities, Health and Health Care Delivery (Research in the Sociology of Health Care, Vol. 20), Emerald Group Publishing Limited, Bingley, pp. 45-55. https://doi.org/10.1016/S0275-4959(02)80006-0

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