Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



Other Publication


The Nation's Health Care Safety Net: The Leadership Challenge for Health Philanthropy



Based on a speech at the Grantmakers In Health 1996 National Meeting on Health & Human Services Philanthropy, February 1996, Los Angeles, CA

Even as the numbers of uninsured and underinsured persons in America are growing, the nation's health care safety net is under more stress today than it has been for 30 years, and it seems that the country has amnesia about the existence of the uninsured. Proposed changes in Medicaid could jeopardize access to acute and long-term health care services for 33 million of the poorest and most disabled Americans.

Safety-net health care providers are also under stresses that include cutbacks in state and local government funding, the diversion of Medicaid revenues to managed care organizations, proposed reductions in disproportionate share funding under Medicare and Medicaid, and the pressures of a competitive market that are eliminating cross-subsidies for charity care. These stresses jeopardize the system of safety-net payments and services and offer major challenges for health philanthropy.


The latest numbers on the uninsured show 40 million Americans without health insurance in 1994. The rates of uninsurance are highest for the poor—one-third of all poor and near-poor families were uninsured in 1994. The system of employment-based health insurance coverage for working families is crumbling. As jobs have moved out of manufacturing, workers have moved from industries with relatively generous sponsorship of family coverage to industries that are significantly less likely to provide health insurance at all, much less coverage for families. The net result is a steep decline in the number of children with private, employment-based insurance, and an increase in uninsured workers whose employers do not offer affordable, or any, health care benefits.

The future looks bleak. The Council on the Economic Impact of Health System Change estimates that 67 million people will be uninsured in 2002, assuming the same rate of deterioration in employment-based health insurance coverage and only a modest tightening of enrollment in Medicaid. Massive cutbacks in Medicaid eligibility would increase this number.


The Medicaid restructuring proposal from the National Governors' Association (NGA) is supported by both Democratic and Republican governors. It converts Medicaid from an entitlement program to a block grant and it is perhaps the greatest threat to health insurance coverage for low-income Americans.

The proposal retains guaranteed eligibility for poor pregnant women and children up to age 12, welfare recipients, most (but not all) elderly poor, and the disabled—as defined by the states. This means that states could define disability so that people with HIV disease or mental illness, or any other disability that does not have political support at the state level, could be excluded. The proposal also eliminates coverage for poor children ages 13 to 18, three million of whom would lose coverage by the year 2002.

The proposal also does not guarantee health insurance benefits. The states would have complete flexibility in defining the amount, duration, and scope of services. In fact, it does not appear to require that beneficiaries receive health insurance coverage or coverage under a managed care plan at all. From the sketchy details, it appears that states could simply reimburse selected providers for bad debts incurred rendering health care services to eligible groups, rather than provide health insurance coverage. This distinction is important. Studies show that the uninsured who rely on free sources of care systematically receive less care than Medicaid beneficiaries.

It would also repeal Title XIX of the Social Security Act, leaving the fate of current protections provided by that law unclear, including nursing home quality standards, prohibitions against discriminating against certain groups of beneficiaries, prohibition of cost sharing, and mandatory assignment by providers.

It is estimated that the NGA proposal would save the states approximately $200 billion over seven years, over 30 percent of projected state spending under current law. If states are going to make cuts of 30 percent, their Medicaid programs cannot continue to cover the people they cover today or provide the benefits they do today. Even with current federal Medicaid requirements, states have demonstrated a variable commitment to health care for the poor.

States, unlike the federal government, are constrained by balanced budget requirements that limit their ability to respond to business cycle slumps. In times of economic recession, sales tax revenues decline, unemployment compensation increases, jobs are lost, poverty increases, and the need for publicly funded health insurance coverage increases. In the NGA proposal, a federal umbrella fund would protect states fiscally in times of economic downturn, but there is no guarantee that the unemployed and poor would get the health insurance coverage they need.


States are not the right vehicle for financing health care for the poor, disabled, frail elders, and unemployed people. This is clearly a national responsibility. There is no reason why assuring that a baby born in Louisiana gets a healthy start in life should be the concern of Louisianans only. It is a national concern that all of the children born in America get off to a healthy start. The country should be examining options for moving toward greater uniformity of standards for defining eligibility, benefits, and quality of care, not relying on states to cope as best they can with the fiscal capacity that is available to them.


Leadership in health philanthropy can help as the country faces challenges to the health care safety net:

  1. Sound the alarm. Philanthropic leaders need to express concern and mount public education campaigns about the reality offered by proposals with inadequate safeguards for vulnerable populations.
  2. Document the facts. Grantmakers need to generate data at the national, state, and local levels. Such information is often otherwise unavailable. The Kaiser Commission on the Future of Medicaid, for example, has established itself as a respected source of information on Medicaid.
  3. Analyze the implications of proposed changes. Quick policy analyses are often required. To generate information quickly on the effects of a proposed bill, the analytic capacity needs to be developed in advance of the proposal.
  4. Speak out and make our voices heard in the public debate. After generating information, communicate it effectively through press releases, condense findings into fact sheets or briefs, accept invitations to testify before legislative bodies, and speak to the media.
  5. Monitor trends. The effects of changes in health and related policies and systems need to be monitored over time. The Annie E. Casey Foundation, for example, is supporting an Urban Institute project monitoring the effects of welfare reform, and The Robert Wood Johnson Foundation is monitoring effects of health system changes in local areas.
  6. Work with consumer groups and health care institutions. Educate consumer organizations and help them to be heard at local, state, and national levels. The poor are a narrow constituency and that means broader coalitions need to be forged to include various groups—for example, those concerned about disabled and elderly people. Grantmakers can use their convening function to facilitate efforts to find a common ground.

    Hospitals, community health centers, and other safety-net providers need assistance in adapting to changes from governmental action and the market focus. For example, The Commonwealth Fund is supporting case studies of safety-net providers to identify best practices and effective strategies for responding to managed care.
  7. Invest in the development of new policy ideas with a three- to five-year time horizon for policy action. The ideas of mandated employer-based health insurance coverage and a single payer governmental health plan are currently unrealistic. Fresh ideas need to be developed to put expanded health insurance coverage back on the national agenda. For example, a model based on the federal employees' health plan with multiple private managed care offerings and a publicly administered fee-for-service plan financed by a combination of taxes and premiums should be explored. Foundations can provide grants to develop such new policy options, analyze their cost, benefits, and administrative implications, and foster public debate about their merits.
  8. Invest in the development of future leaders. Philanthropy needs to mobilize talented people to work toward a shared vision of an America where everyone who needs health care gets it. We can start in our own organizations. There is a real danger in the philanthropic sector of thinking that we generate the only good ideas. Grantmakers should prepare their staffs to be open to outside ideas and accessible to others. Our work should not end with grantmaking. We should view ourselves as facilitating the work of grantees, being accountable for results, and effectively communicating findings to important audiences. We should encourage staff and grantees to serve as leaders in foundation and professional organizations, write and speak to professional or public policy audiences, and serve on health policy commissions or advisory committees.

Grantmakers can also expand their impact by supporting the development of a future generation of potential leaders. A good example is The Robert Wood Johnson Foundation Clinical Scholars Program that for many years has been systematically developing a cadre of leaders who are now in important positions in the health sector.


America needs to invest in its human resources if it is to continue the economic progress gained in this century through the development of its natural resources. John Evans, the former chairman of the Rockefeller Foundation, said at The Commonwealth Fund's board retreat last July, "U.S. foundations are a unique resource. No other country has independent institutions with comparable power to stimulate new directions, demonstrate the efficacy of different approaches to problems, and provide the basis for rational public policy independent of financial support from government."

The country's top priority should be investment in helping all Americans realize their human capacity. In health philanthropy, we can assist in this effort by developing fresh approaches, informing debate and mobilizing talented people who share a common concern. It is a large task, but within our capacity as a nation to achieve.


Publication Details



The Nation's Health Care Safety Net: The Leadership Challenge for Health Philanthropy, Karen Davis, Ph.D., The Commonwealth Fund, February 1996