Policy Considerations for Defining Essential Health Systems

Within the U.S. health care system, a small share of hospitals provides a disproportionate share of care to low-income patients. Policymakers long have recognized the need to identify these hospitals because of their role in making health care affordable for patients. However, existing federal hospital designations fail to identify the hospitals most committed to providing essential care in their communities.

The bipartisan Reinforcing Essential Health Systems for Communities Act (H.R. 7145), introduced by Reps. Lori Trahan (D-Mass.) and David Valadao (R-Calif.), would fill this gap in federal law. The bill defines essential health systems using evidence-based and practical measures of a hospital's patient mix and the amount of uncompensated care it provides. The essential health systems identified by H.R. 7145 represent 17% of all U.S. hospitals but provide nearly 70% of the nation's charity care.

This policy brief outlines how an essential health system designation relates to existing designations and discusses policy considerations for developing measures to identify essential health systems. It concludes by reviewing how an essential health system designation could better target resources to hospitals that need them most.