What Does The Hospital Deal Mean For Health Care Reform?
What Does The Hospital Deal Mean For Health Care Reform?
Today, the hospitals formally announced that they will contribute “some $155 billion in Medicare and Medicaid savings over the 10 years to cover health care cost reform.” Hospitals account for approximately 40 percent of all spending in the health care system and reformers believe that some of that spending is wasted on unnecessary services. The trick is to cut out the excess spending and re-invest it in financing health care reform.
This agreement follows the President’s June proposal to cut “more than $200 billion in expected reimbursements to hospitals over 10 years” by incorporating productivity adjustments into Medicare payment updates and reducing subsidies to hospitals for treating the uninsured, and suggests that the industry believes that health reform may be inevitable. Thus, rather than accept the steeper cuts, the hospitals — who fear that reductions in reimbursements would not parallel increases in coverage — voluntarily chose to embrace fewer savings on a more favorable time line. Still the reductions are significant:
- Lowering the annual update rates paid to hospitals.
- Reducing Medicare payments for excessive and preventable readmissions.
- Lowering bonus payments for hospitals who treat the undeserved: As more Americans become insured, hospitals will be spending less resources on uncompensated care. The hospitals agreed to a less aggressive schedule for implementing these reductions. Instead of a hard date of 2013, the decrease in payments would be triggered by coverage expansion a year or two after the implementation of the new insurance program for the uninsured. Obama’s proposal would have saved $106 billion over ten years (on this provision), thE\e compromise would save about $50 billion over a decade.
The savings are smaller than some progressives would have liked but they are real, perhaps even more so than the pharmaceutical industry’s recent pledge to lower (how, we’re not yet exactly sure) spending on prescription drugs by $80 billion. As the industry itself has admitted the savings are there for health care reform. Combined with additional savings from health care modernization and the additional revenue from an employer mandate, vice taxes, and possible changes to the tax treatment of employer-provided health insurance, the resources for reform are at at least $1.2 trillion. Most importantly, this agreement keeps the hospitals in line and supportive of reform.
4 Responses to “What Does The Hospital Deal Mean For Health Care Reform?”
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Wow, Joe Biden introduced quite a group:
CEO of HCA, a for-profit hospital company owned by KKR, a private equity underwriter
CEO of Community Health System, a for-profit hospital company (publicly traded)
Head of Catholic Hospital Association-many Catholic hospitals fill their charitable mission, others call themselves “HCA with a heart.”
Head of the American Hospital Association, a hospital industry trade group.
This meeting was for show. HCA & CHS owned a hospital in my town. The nonprofit shoulders 80% of the indigent care load, the for-profit 20%. Both companies were traded at the height of the buyout boom, adding $2 billion in health care costs, solely from increased interest expense.
None of these groups has the right to bargain on behalf of all hospitals, just like the AMA doesn’t represent all doctors. This is a political stunt.
Once again, the devil is in the details. Watch how financially stressed safety net facilities fare. Our White House Health Czar turned two nonprofit community hospitals into for-profit facilities. That’s in addition to her work as a private equity underwriter for CCMP Capital Partners.
The key is the bill that comes out of conference. The rest is a kabuki dance.
July 8th, 2009 at 8:05 pmThis is remarkably a deal that appears to be a copy, motivationally speaking of the 80 billion the pharmaceutical industry agreed to pay not long ago. The simple fact that our new administration has to ‘deal’ with such industries is a bit concerning.
Obama plans on signing a bill in October regarding health care reform, and enacting this reform by the end of August. This deal lacks significant details at this time.
Baucus opposes a universal health care system, which exists in every developed country presently, even though the majority of U.S. citizens support such a system, including most doctors.
Baucus receives bribes from the health care sector that average nearly a million dollars a year. Obama receives higher bribes annually from the health care sector.
July 9th, 2009 at 12:40 amDear Mr. Igor Vorsky,
I’m not sure you understand the point about concerns raised over government funding of abortion services. Like it or not, there are a significant number of people in this country who have moral or ethical concerns over abortion. So I propose an alternative: private charities could subsidize abortion services, and these charities could be voluntarily funded by those who have no objection to abortion.
And you raise a point about health care reform. Individuals should be empowered to lead healthy lives. Catastrophic events should be covered by health insurance. But there are plenty of services that are not catastrophic in nature, and we should not finance them as they contribute to moral hazard, overutilization, and drive up healthcare costs.
July 9th, 2009 at 11:41 amThe sale of two hospital companies, HCA to KKR and Triad to CHS, increased interest costs by $2 billion annually. No new provider was added, no high tech equipment was purchased, no new hospital bed was built. The game of the for-profit money changers did it. That’s not going away, but will accelerate under the Obama plan.
Bundled payments will encourage vertically integrated health care companies. That means buying and selling of firms, something the White House Health Czar knows much about.
July 9th, 2009 at 12:31 pm