Disproportionate Share Hospitals (DSH) are hospitals that receive federal and state funds to subsidize the costs associated with providing care to uninsured and very low-income people. California's federal allotment of DSH dollars is one of the highest in the country. California’s DSH program accounted for more than $1 billion in federal matching payments to 127 public and private hospitals in fiscal year 1997-98. Combined state and federal DSH funds represent approximately 12% of total Medi-Cal expenditures.

Since its inception in 1980 through the Boren Amendment, the DSH program has evolved into an important source of support for safety-net hospitals and health systems. However, the program's ability to supplement the safety net effectively has been an issue of constant debate. Moreover, dramatic changes in health care financing have further challenged the DSH program's effectiveness. This background paper is an effort to summarize many of these significant changes and outline upcoming challenges.

This report looks at statistics from the late 1990s and includes:

• History of the federal DSH program;
• California's experience;
• Emergency service supplemental payments fund; and
• The future of DSH.

The complete report is available under Document Downloads below.