Expanding Health Coverage in the District of Columbia: D.C.’s Shift from Providing Services to Subsidizing Individuals and Its Continuing Challenges in Promoting Health, 1999-2009

In the late 1990s the city of Washington, D.C. faced a crisis in the health delivery system serving its large low-income population. Its public hospital and associated clinics were offering poor quality care at high cost per patient. Low-income residents had poor access to primary or specialty care and relied heavily on emergency departments. Health outcomes were abysmal.

Starting in 1999, the District initiated a series of health reforms to expand access to health care and improve residents’ health. The city closed the public hospital’s inpatient facility, transferred control of the hospital’s emergency department and affiliated clinics to a nonprofit health care provider, and created the DC HealthCare Alliance to pay for health services for uninsured low-income District residents who were not eligible for Medicaid. The District government shifted from directly providing health care to purchasing health care services from private providers.

The closure of D.C. General Hospital was controversial and politically unpopular, but officials determined it was necessary based on the hospital’s out-of-control finances, serious quality problems and low utilization rates. By setting up the DC HealthCare Alliance, the city created an insurance-like program that allowed low-income residents to access primary and specialty services from participating private providers. Enrollment in the Alliance program exceeded 50,000 in 2009. As a result of the Alliance and a generous Medicaid program, the District currently has one of the lowest uninsured rates in the country. The Alliance helped stabilize and strengthen community health centers—both the former public clinics and nonprofit community health centers—since it attached a revenue stream to patients the centers had been serving without reimbursement.

The District’s successes and challenges in redesigning the health care system for low-income residents provide important lessons for other states and localities. To be sure, some of the District’s circumstances were unique: The political opposition to closing the public hospital and the public clinics was neutralized by Congressional pressure for cost containment. Moreover, the reforms were supported by a federally-appointed Control Board, which managed the city’s finances from the mid-1990s until 2001 as the city emerged from insolvency. But the city’s experiences in shifting its role to a purchaser of health care services rather than an operator of a public provider system highlight common opportunities and pitfalls. 

  • Providing access to health services via insurance coverage is a viable option for governments, as an alternative to providing services through a public hospital and associated clinics. The shift to “buying” from “making” health services is a challenge, but a manageable one. Either approach can work well or poorly, depending on choices in design, financing, implementation, and ongoing management.
  • However, key to the success in “buying” health care is the existence of a functioning health care delivery system—a network of providers (primary care, specialists, diagnosticians, and so on) willing and able to serve low-income patients, and able to communicate with each other and coordinate care. The Alliance had difficulty recruiting providers, especially physicians. Access to primary and specialty care is still inadequate, and the city is still struggling to create an integrated model of care.
  • Health outcomes are still poor. The District’s health care system is still struggling to improve health outcomes by focusing on chronic diseases, increasing primary care usage and reducing reliance on emergency departments and other hospital-based care.
  • Moreover, health system redesign does not address the social determinants of health, such as personal behavior, income, education and environmental factors.  Improving health outcomes will take not only reforms in health care delivery, but improved education, housing, and job opportunities, as well as changes in diet and exercise and reductions in smoking and substance abuse. Many of these factors are outside the control of the health care system and require major coordinated efforts across multiple agencies.

The key lessons for privatization and coverage expansion alike are that changes in health care financing cannot succeed to their fullest without supportive changes in delivery of care and complementary efforts in public health and other areas that greatly affect health status.