Impacts of Extreme Heat on Federal Healthcare Spending
Public health insurance programs, especially Medicaid, Medicare, and the Children’s Health Insurance Program (CHIP), are more likely to cover populations at increased risk from extreme heat, including low-income individuals, people with chronic illnesses, older adults, disabled adults, and children. When temperatures rise to extremes, these populations are more likely to need care for their heat-related or heat-exacerbated illnesses. Congress must prioritize addressing the heat-related financial impacts onthese programs. To boost the resilience of these programs to extreme heat, Congress should incentivize prevention by enabling states to facilitate health-related social needs (HRSN) pilots that can reduce heat-related illnesses, continue to support screenings for the social drivers of health, and implement preparedness and resilience requirements into the Conditions of Participation (CoPs) and Conditions for Coverage (CfCs) of relevant programs.
Extreme Heat Increases Fiscal Impacts on Public Insurance Programs
Healthcare costs are a function of utilization, which has been rapidly rising since 2010. Extreme heat is driving up utilization as more Americans seek medical care for heat-related illnesses. Extreme heat events are estimated to be annually responsible for nearly 235,000 emergency department visits and more than 56,000 hospital admissions, adding approximately $1 billion to national healthcare costs.
Heat-driven increases in healthcare utilization are especially notable for public insurance programs. One recent study found that there is a 10% increase in heat-related emergency department visits and a 7% increase in hospitalizations during heat wave days for low-income populations eligible for both Medicaid and Medicare. Further demonstrating the relationship between increased spending and extreme heat, the Congressional Budget Office found that for every 100,000 Medicare beneficiaries, extreme temperatures cause an additional 156 emergency department visits and $388,000 in spending per day on average. These higher utilization rates also drive increases in Medicaid transfer payments from the federal government to help states cover rising costs. For every 10 additional days of extreme heat above 90°F, annual Medicaid transfer payments increase by nearly 1%, equivalent to an $11.78 increase per capita.
Additionally, Medicaid funds services for over 60% of nursing home residents. Yet Medicaid reimbursement rates often fail to cover the actual cost of care, leaving many facilities operating at a financial loss. This can make it difficult for both short-term and long-term care facilities to invest in and maintain the cooling infrastructure necessary to comply with existing requirements to maintain safe indoor temperatures. Further, many short-term and long-term care facilities do not have the emergency power back-ups that can keep the air conditioning on during extreme weather events and power outages, nor do they have emergency plans for occupant evacuation in case of dangerous indoor temperatures. This can and does subject residents to deadly indoor temperatures that can worsen their overall health outcomes.
The Impacts of the One Big Beautiful Bill Act
The One Big Beautiful Bill Act (H.R. 1) will have consequential impacts on federally-supported health insurance programs. The Congressional Budget Office projects that an estimated 10 million people could lose their healthcare coverage by 2034. Researchers have estimated that a loss of coverage could result in 50,000 preventable deaths. Further, health care facilities and hospitals will likely see funding losses as a result of Medicaid funding reductions. This will be especially burdensome to low-resourced hospitals, such as those serving rural areas, and result in reductions in available offerings for patients and even closure of facilities. States will need support navigating this new funding landscape while also identifying cost-effective measures and strategies to address the health-related impacts of extreme heat.
Advancing Solutions that Safeguard America’s Health from Extreme Heat
To address these impacts in this additionally challenged context, there are common-sense strategies to help people avoid extreme heat exposure. For example, access to safely cool indoor environments is one of the best preventative strategies for heat-related illness. In particular, Congress should create a demonstration pilot that provides eligible Medicare beneficiaries with cooling assistance and direct CMS to encourage Section 1115 demonstration waivers for HRSN related to extreme heat. Section 1115 waivers have enabled states to finance pilots for life-saving cooling devices and air filter distributions. These HRSN financing pilots have helped several states to work around the challenges of U.S. underinvestment in health and social services by providing a flexible vehicle to test methods of delivering and paying for healthcare services in Medicaid and CHIP. As Congress members explore these policies, they should consider the impact of H.R. 1’s new requirements for 1115 waiver’s proof of cost-neutrality.
To further support these efforts for heat interventions, Congress should direct CMS to continue Social Drivers of Health (SDOH) screenings as a part of Quality Reporting Programs and integrate questions about extreme heat exposure risks into the screening process. These screenings are critical for identifying the most vulnerable patients and directing them to the preventative services they need. This information will also be critical for identifying facilities that are treating high proportions of heat-vulnerable patients, which could then be sites for testing interventions like energy and housing assistance.
Congress should also direct the CMS to integrate heat preparedness and resilience requirements and metrics into the Conditions of Participation (CoPs) and Conditions for Coverage (CfCs), such as through the Emergency Preparedness Rule. This could include assessing the cooling capacity of a health care facility under extreme heat conditions, back-up power that is sufficient to maintain safe indoor temperatures, and policies for resident evacuation in the event of high indoor temperatures. For safety net facilities, such as rural hospitals and federally qualified health centers, Congress should consider allocating resources for technical assistance to assess these risks and the infrastructure upgrades.
Public health insurance programs, especially Medicaid, Medicare, and the Children’s Health Insurance Program (CHIP), are more likely to cover populations at increased risk from extreme heat, including low-income individuals, people with chronic illnesses, older adults, disabled adults, and children.
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