In Wonkblog yesterday, Sarah Kliff highlighted an important aspect of immigration reform: Undocumented immigrants who gain legal status will also gain access to the Affordable Care Act’s options for getting health insurance. The Congressional Budget Office estimated that the ACA would reduce our nonelderly uninsured by 32 million, but 23 million people would remain without health insurance – and one-third of those people would be undocumented immigrants.

The ACA has two main mechanisms for offering affordable coverage to the uninsured: 1) expansion of Medicaid eligibility to all legal residents with income up to 133% of the federal poverty level, which the Supreme Court has since made optional for states, and 2) creation of state-based health insurance exchanges through which individuals and small businesses can purchase affordable, good-quality insurance and through which individuals can receive premium subsidies if their incomes are between 133% and 400% of the poverty level.  Undocumented immigrants have long been ineligible for Medicaid, and the ACA prohibits them from purchasing insurance through the exchanges. So, these two routes to insurance coverage are closed to undocumented immigrants.

Uninsured patients have long gotten care from community health centers, which provide primary care to all who seek it regardless of insurance status or ability to pay, and hospitals, which must screen and stabilize anyone who shows up in an emergency department requesting care. (Emergency rooms and community health centers are key parts of the “healthcare safety net,” which delivers health services to vulnerable populations.) Due to Congressional decisions, though, many health centers and hospitals will find it hard to continue serving the uninsured who’ll still visit them as the ACA is implemented.

Under the ACA, hospitals that have relied on “disproportionate share” funding meant to offset costs of caring for uninsured patients will see that funding slashed. Medicare and Medicaid’s “Disproportionate Share Hospital” programs are designed to send funds to hospitals that deliver lots of uncompensated care to low-income patients. Under the ACA, those payments will fall to half their former levels. These cuts were made on the assumption that hospitals would provide far less uncompensated care as uninsurance rates fell. However, hospitals that treat large numbers of undocumented immigrants and those in states that decline to expand Medicaid eligibility will still be delivering lots of uncompensated care. The New York Times’ Nina Bernstein explored the impacts on some of the hospitals that are seeing their DSH funds decline as their burdens of uncompensated care remain high.

Denying insurance opportunities to undocumented immigrants also has implications for the community health centers that provide care to much of the uninsured population. Federally qualified health centers do get federal grants to assist them in serving the uninsured, but they also rely heavily on Medicaid. Right now, a lot of uninsured undocumented immigrants with incomes below 133% of the federal poverty level are paying very little for care from community health centers; if a portion of these patients were to get Medicaid coverage and continue getting their primary care from CHCs, the health centers’ finances would be better off.

Health centers face another ACA-related challenge, too: Many of those who gain Medicaid coverage will seek care from CHCs, which have long been a major provider of high-quality, cost-effective care to Medicaid beneficiaries (and to immigrants who appreciate health centers’ commitment to providing care to non-native English speakers). In anticipation of a surge in demand for health center services, the ACA included an $11 billion Health Center Trust Fund to enable health center expansion. But, as I wrote back in August, Congress raided that pot:

Under the ACA, Health Center Trust Fund money should have totaled $1 billion in FY 2011, with most of that money going to health-center capacity expansions. But the April 2011 budget deal that averted a government shutdown slashed that to $600 million, and most of that was shifted from expansions to ongoing operations because the budget for funding existing centers’ operations was also cut. The FY 2012 federal appropriations level is also far below the amount specified in the ACA, and will also have to be largely devoted to sustaining existing capacity rather than adding new capacity. (If you want all the gory details, they start on page 12 of this brief from the Kaiser Commission on Medicaid and the Uninsured.)

Congress should fully invest in community health center expansion and figure out a way to ensure (through DSH payments or another mechanism) that hospitals delivering high levels of uncompensated care are able to survive financially. They should also consider the healthcare safety net when drafting immigration-reform legislation. Allowing immigrants who’ve applied for, but not yet received, green cards or citizenship to purchase subsidized coverage through the exchange would be one way to ease the burden on the providers that care for undocumented immigrants.