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Study Showcases Community Health Centers as Remedy for Woes of Economy, Health Care System

By John Reichard, CQ HealthBeat Editor

August 9, 2010 -- Perhaps as never before, community health centers are getting their day in the sun, with billions of dollars in new federal funding coming their way and a growing recognition of the key role they may play in providing cost-effective care to the newly insured under the overhaul law.

Marking the start of "National Health Center Week" was a new study released Monday that seeks to highlight another benefit of the centers—their impact on disadvantaged neighborhoods at a particularly troubled time in the nation's economic life.

Released by the left-leaning Center for American Progress (CAP), the study said that funding of the centers under the overhaul law and the stimulus law "will generate $53.7 billion in economic activity for some of the most disadvantaged neighborhoods in the country over the next five years," with $33.5 billion of that coming from the overhaul law.

Over the same period, the centers will support 457,289 jobs in the communities, some 284,000 from the overhaul law. The report breaks down economic activity and jobs created by the health centers by state, saying for example that in the year 2015 Wyoming will have 567 jobs generated by the funding, while California will have 71,649. The corresponding figures for economic activity generated in those two states that year are $57.4 million and $9.3 billion, according to the study.

These figures assume the direct outlays from the stimulus and the overhaul law will have a multiplier effect on local economies. The direct funding under the overhaul law and the stimulus measure is far lower than the estimated $53.7 billion in economic activity.

For example, the stimulus law provides $2 billion in funding over two years. The overhaul provides $9.5 billion in operating funds to fund expanded services at existing centers and $1.5 billion to construct new ones for a total of $11 billion over a five-year period.

The operating funds provided under the overhaul grow over time, starting with $1 billion in 2011, then rising to $1.2 billion in 2012, $1.5 billion in 2013, $2.2 billion in 2014 and $3.6 billion in 2015.

The added $9.5 billion in operating funds must be in addition to the current appropriated funding that totaled $2.2 billion in fiscal 2010.

HHS Secretary Kathleen Sebelius announced a first installment of center grants on Monday, saying that some $250 million would be awarded to support some 350 sites in fiscal 2011.

Besides the direct economic effect of employing more people within the center, the dollars provide indirect benefits, writes the author of the study, CAP's Ellen-Marie Whelan.

Thus, to serve an expanded clientele, a center would buy more waiting room chairs from a local furniture store, which in turn buys more paper from an office supply store to print receipts and a truck from a car dealer to make deliveries, and center employees spend their income on everyday purchases such as groceries, clothing, cars and TVs, Whelan writes.

Because of where centers are located, the funds target areas of greater need, she says. Under the law, the centers must be located in areas with relatively high poverty rates, such as inner-city neighborhoods or isolated rural areas.

In addition to studying the economic effects, the report profiles the clientele of the centers and the services they provide. Two-thirds of patients who receive care at the centers are members of racial and ethnic minorities. Seventy percent have incomes below the federal poverty level, which is $22,000 for a family of four. Almost all clients have incomes below twice the federal poverty level, but the centers take all patrons, whether uninsured or insured.

Speakers at a CAP-sponsored forum Monday noted that because of layoffs, even affluent Americans are going to the centers for treatment. An executive with a New York City-based center said she's even seeing laid-off Wall Street bankers coming for treatment, and another executive with a Loudoun County, Virginia-based facility said the departure of AOL from that community generated center clientele, including entrepreneurs who are starting their own businesses because of AOL's departure.

According to Whelan's report, "although there are over 8,000 community health centers, the unmet need is still enormous." It cited an estimate by the Government Accountability Office last year that 43 percent of areas of the country designated by the federal government as medically underserved still do not have a community health center.

The centers "serve a much higher percentage of individuals with Medicaid," Whelan adds. About half of the 32 million uninsured Americans expected to gain coverage under the overhaul are projected to go into the Medicaid program, raising concern that they won't be able to find health care services. But the growth of the centers will help serve them, she said.

But Daniel Hawkins, senior vice president of the National Association of Community Health Centers, said at the forum that the funding formula for centers is flawed in that it does not address areas of true need within affluent communities.

Thus there are no community health centers in Virginia's Fairfax County, even though there are pockets of true poverty there, he said. Similarly, the center in Loudoun County would lose federal funding if the county's demographics shift to the point that it becomes too affluent on average, he added. Hawkins said funding decisions should be center-based, with centers able to qualify for federal money regardless of area demographics if they could show that they serve a sufficiently large, needy clientele.

Funding for the centers has drawn bipartisan support over the years, with President George W. Bush championing a big increase in center funding during his administration.

Grace-Marie Turner, president of the right-leaning policy analysis organization the Galen Institute, said there is clearly an issue with access to care "in rural and many urban areas." But, she said, "I am very concerned about whether there are enough doctors and nurses to provide to staff the centers that already are in place. Making sure existing clinics are adequately staffed and funded would seem to me the highest priority before we dramatically expand the number."

Hawkins said, however, that the expansion of funds under the stimulus was supposed to provide services to 2.9 million more people within two years and that centers are on track to exceed that figure. "They're going to blow past that 2.9 million target," he said.

Hawkins said he expects the number of health care professionals employed at the centers to keep pace with the expanded number of size of facilities.

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