Hospital Industry May Cut Billions To Help With Reform
The hospital industry is close to agreeing to cut $150 billion to $170 billion over the next decade as part of a deal with the White House and congressional democrats to help pay for health care reform. While not final, the deal could be announced within days.
Kaiser Health News reports: "A critical feature is an agreement on phasing in the Medicare and Medicaid cuts. Hospitals have been objecting to President Barack Obama's proposals to slash payments over 10 years. They have been seeking assurances that cuts would occur in stages as more people get insurance under reform legislation. If the cuts were to take effect sooner, hospitals say, they'd lose billions of dollars in revenues while caring for large numbers of uninsured patients. An agreement would boost Obama's drive for reform legislation by addressing the biggest concerns of one of the most influential players in the health care overhaul debate. It would provide more money to the administration and Congress to cover the uninsured." KHN also notes: "A hospital agreement would follow a recently announced deal involving the pharmaceutical industry, the White House and the Senate Finance Committee."
KHN reports: "Hospital costs make up the biggest slice of national health expenditures--about 31 percent of the $2 trillion spent annually. That's why hospitals are a target for Obama and Democrats searching for ways to finance reform legislation. Beyond the timing of payment cuts, hospitals are concerned about proposals to expand the powers of a panel that advises Congress on payment rates for hospitals. Under an Obama proposal, the Medicare Payment Advisory Commission would set the rates itself (though Congress could overrule it). Such an arrangement would make it harder for the industry to effectively lobby against payment reductions. Hospitals also have raised concerns about proposals to create a government-run insurance plan to compete with private insurers. They want to make sure that such a plan doesn't link its payment rates to Medicare rates, which are lower than those paid by private insurers" (McGinley and Galewitz, 7/2).
Politico also reports: "An agreement with the hospital groups would boost [Max] Baucus' effort to hold together an unwieldy coalition of industry, union and consumer groups working to pass a health care reform bill - rather than having some of the groups pouring money into campaigns against it. ...The Senate chairman has been pressuring hospitals and insurers to follow the lead of the pharmaceutical industry and step up with savings to help pay for the $1 trillion health care package. He has reminded the six major health groups, including the American Hospital Association, of their May pledge to find $2 trillion in savings over the next 10 years. In a radio address last month, Obama proposed more than $200 billion in hospital payment cuts to help pay for his bill. The groups involved in the talks include the American Hospital Association, Catholic Health Association, and the Federation of American Hospitals, which is led by Chip Kahn, who helped bury health care reform in 1993-94 with his 'Harry and Louise' ads" (Brown and Frates, 7/3).
Meanwhile, the Chicago Tribune reports on hospitals' preparations for cuts in the Chicago area: "Many hospital systems are merging operations and preparing for federal spending cuts. St. James Hospital and Health Centers is moving most elective surgical procedures this week from its Olympia Fields campus to its Chicago Heights facility as it consolidates some services to improve efficiency. It's not the first time the community hospital has cut back on services... [but] the recession that began in December 2007 has helped force hospitals such as St. James to rethink the types and number of services they can offer. Now the political landscape could permanently change the way many facilities do business, as hospitals brace for huge cuts in federal health spending proposed by President Barack Obama and Congress to fund care to the more than 46 million uninsured people. Across the country, hundreds of hospitals already have reduced services amid the recession and rising unemployment, leaving an increasing number of patients without medical coverage or unable to pay their bills. And the number could rise: The nation's jobless rate climbed to a 26-year high of 9.5 percent last month, as employers cut 467,000 jobs. Despite efforts to preserve services by consolidating at nearby facilities, hospitals are increasingly reducing some types of care."
The Chicago Tribune notes: "While hospitals see cuts coming in most health-care proposals, its industry lobby says Obama's proposal to cut $300 billion over 10 years is too deep, particularly given the state of the economy and budget crunches in states such as Illinois that are squeezing what they pay doctors under state-run Medicaid programs" (Japsen, 7/6).