Providers must accept that cuts are coming in government healthcare programs
It’s time to move beyond denial on government cuts
We are fully in agreement with David Burda’s commentary in Modern Healthcare, “Gun to the head” (Aug. 8, p. 21). Provider groups need to stop bringing out what Burda described as “the usual crying towels” and “alarmist rhetoric” about the debt-ceiling law; accept the fact that Medicare and Medicaid will undergo significant changes to help put our nation’s fiscal house in order; and work with their constituencies to frame a set of changes that will be in the best interests of the communities they serve.
The recent TV ads placed by the Coalition to Protect America’s Health Care before the debt-ceiling compromise was passed, “What Were You Thinking,” are a case in point regarding alarmist rhetoric. In the ads, three supposed Medicare beneficiaries bemoan any federal budget deficit-reduction plan that would include “cuts of over $100 billion for hospital care.”
In conjunction with the ads, at least one national hospital association was pleading with all of its members to “reach out again to urge your legislators to protect hospital care” and to remind them that “enough is enough.” It pointed out that $155 billion in hospital payment reductions had already been included in the healthcare reform law, and claimed that “Alternatives exist.” Well, what are they?
Who is this coalition? Its board consists of the CEOs of virtually every national hospital trade association representing for-profit, notfor-profit and public hospitals, along with a smattering of other CEOs whose organizations also have hospital constituencies or whose organizations are themselves hospitals or systems.
What does a total reduction of the magnitude of $255 billion ($155 billion plus $100 billion) really amount to over 10 years? Even under a very conservative assumption of 5% annual growth in combined Medicare and federal Medicaid spending for hospital care, that $255 billion “cut” translates to an average annual reduction in the rate of increase in federal hospital spending of less than 0.5% a year.
Under the debt-ceiling law, as Burda indicates, healthcare providers will be lucky if the trigger is pulled and they experience cuts in their Medicare payment rates of 2% a year. We believe that they won’t be so lucky, or at least not for long. The Standard & Poor’s downgrade of the U.S. government’s credit
Hospitals were able to cope somehow before the
advent of Medicare and Medicaid in the ’60s.
rating will put enormous pressure on the new congressional “supercommittee” to look for much greater savings over 10 years than the $1.5 trillion minimum.
S&P has stressed that overhauling entitlement programs is “key to long-term fiscal sustainability” and that the debt-ceiling deal “envisions only minor policy changes in Medicare.”
So it’s time to not only talk facts but also face facts. The U.S. economy has changed significantly, and for the worse, and we need to exercise real leadership in helping our country, our constituencies and our communities cope in this new world. Let’s recognize that the Medicare and Medicaid programs are huge contributors to federal spending and that our nation’s fiscal health requires that these federal programs, as well as many others, must change with the times.
The only questions are how and how quickly. The answers may or may not be in the best interests of the major national hospital and physician associations, whose dues revenue is dependent on a continued need to lobby Congress and federal bureaucrats on behalf of members over administered rates levels and related policies.
Whatever directions are taken, let all of us in healthcare show our country what we can do, individually and in collaboration with others, to live within those parameters and help our country live within its means. That is real value. So is protecting the public and private not-for-profit hospitals and other healthcare providers that serve as the true “safety net.” If the “haves” don’t help the “havenots,” the “haves” will ultimately bear the burden one way or another that the “have-nots” are carrying for them.
If charitable hospitals across the country were able to cope before the advent of the Medicare and Medicaid programs in the ’60s, we have every faith that they will be able to cope with whatever lies ahead if they demonstrate real value to their communities. Howard Berman is chairman of the Alliance for Advancing Nonprofit Health Care and a retired president and CEO of Lifetime Healthcare Cos., Rochester, N.Y. Bruce McPherson is president and CEO of the alliance.