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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

Randall R. Bovbjerg, Gina M. Lagomarsino, Jack A. Meyer, and Barbara A. Ormond

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. 

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.

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