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Delaware Senate Democrats

Sen. Sarah McBride unveils legislation to boost Medicaid funding through healthcare partnership

March 18, 2024

WILMINGTON – As the State of Delaware struggles to keep pace with rising healthcare costs, Sen. Sarah McBride on Monday proposed legislation to unlock a new source of federal funding that will bolster health insurance coverage for thousands of low-income Delawareans. 

Unveiled during a joint press conference with Delaware hospital executives, health care providers and advocates, Senate Bill 13 would mark the largest ongoing infusion of funding in Delaware’s Medicaid program since the Affordable Care Act.

Known as the Protect Medicaid Act of 2024, SB 13 will result in more than $100 million in new funding to protect, enhance, and expand Medicaid for the patients and families who depend on the coverage it provides. 

“As a state of neighbors, Delaware’s greatest strength has always been our willingness to work together to achieve the best outcomes for our shared communities,” said Sen. McBride, chair of the Senate Health and Social Services Committee.

“This legislation builds on that proud tradition by fostering a new collaborative partnership between the State of Delaware and our hospital systems that will allow us to dramatically improve health coverage without increasing the tax burden for the average Delawarean or shifting money away from existing programs,” she said. “This is a tried-and-true method for strengthening state Medicaid programs, and I am thankful to our healthcare partners for agreeing that the time has finally come for us to work together to improve health outcomes for vulnerable Delawareans and protect our Medicaid program for generations to come.”

Currently, nearly 1 in 3 Delawareans receive acute and long-term health care through Medicaid, a health insurance program primarily for low-income families and Delawareans with disabilities, that is jointly funded by the state and federal governments. On average, every two dollars a state invests in Medicaid is matched with three dollars by the federal government.

Over the past 20 years, states have increasingly used financial assessments on healthcare facilities to boost the amount of state funding available for Medicaid, which in turn is used to generate additional federal match payments.

Healthcare facility assessments are currently the second largest source of funding for states’ share of Medicaid costs behind general funds. Today, 49 states have at least one facility assessment in place, including Delaware, while 34 states and Washington D.C. have three or more provider taxes.

Delaware is one of only a few states without a facility assessment on hospitals, which means the First State is missing out on critical Medicaid funding that the vast majority of states are able to access. 

Delaware’s first healthcare facility assessment, sponsored by Sen. McBride’s predecessor Sen. Harris McDowell, signed into law by Governor Jack Markell in 2013, collects revenue from nursing facilities.

Senate Bill 13 would add Delaware to the list of states with a hospital assessment by phasing in a new 3.58 percent levy on the net patient revenues of Delaware’s acute-care and behavioral health hospitals. In total, the levy is expected to generate more than $100 million in new Medicaid funding between both the assessment and federal matching funds. 

“Escalating healthcare costs impact us all, but it’s the most vulnerable who feel the weight of these expenses the most,” said House Minority Whip Rep. Kerri Evelyn Harris, chair of the House Health & Human Development Committee and the House prime sponsor of SB 13. “By stabilizing in this space, we’re not only addressing an immediate need but laying the groundwork for broader initiatives that will support those in moderate-income brackets as well.”

Pending final approval from the federal Centers for Medicare & Medicaid Services, the broad-based and uniformly imposed hospital assessment imposed by SB 13 would allow the State of Delaware to take advantage of federal Medicaid rules that allow some money in the new fund to be directed to hospitals to better serve Medicaid patients.

Through an upfront investment from the hospitals that increases Medicaid funding, the State of Delaware would be able to use the additional federal revenue generated to support enhancing and expanding Medicaid programs. Other states have used hospital assessments to increase provider rates, mitigate rate cuts or expand eligibility to more parents and children, for example.

“On behalf of Delaware’s hospitals and health systems, I want to thank Senator Sarah McBride for her leadership and collaboration as we worked together for nearly a year to reach agreement on a proposal that will bring more than $100 million in additional federal healthcare funding to our state,” said Brian Frazee, President & CEO of the Delaware Healthcare Association. “This effort will enable Delaware to continue investments in our shared healthcare priorities, including workforce, access, behavioral health, and health equity. This is yet another example of what we can accomplish when policymakers, elected officials, and hospitals work together to advance our shared goal of enabling Delawareans in all of our local communities to achieve optimal health.”

In announcing Senate Bill 13 at the Carvel State Office Building in Wilmington, Sen. McBride was joined by health care industry leaders, officials from ChristianaCare, the largest healthcare provider in Delaware and the First State’s largest private employer.

“This historic agreement represents a major step forward in protecting our state’s Medicaid program, expanding access, and improving health outcomes here in Delaware,” said. Dr. Janice Nevin, CEO of ChristianaCare.

“Through the investment by our state’s hospitals, we join neighboring states in unlocking critical federal resources for Delaware’s patients and providers alike,” she said. “Senate Bill 13 would not have been possible without the collaborative and thoughtful approach by Sen. McBride, which allowed our hospitals and legislators to unite behind solving our common challenges by putting forward this bold proposal.”

Senate Bill 13 will be officially introduced in the Delaware General Assembly on Tuesday and assigned to the Senate Health and Social Services Committee.