MEDICARE: More Hospital Reimbursement Cuts Possible
Clinton administration officials are "preparing to recommend a substantial new round of cuts" in Medicare hospital reimbursements for inpatient care, ranging from $6 billion to $10 billion over the next five years. The cuts, which would amount to 1% to 2% of total Medicare inpatient outlays, stem directly from a recent report by the Medicare Payment Advisory Commission that found hospital profits reached record levels last year, averaging 16% for overnight stays. The Washington Post reports that a senior administration official justified the cuts saying "the government must be especially careful not to use up Medicare funds too quickly" because the hospital trust fund is "projected to become insolvent in about a decade."
Salt In The Wounds
Hospital officials quickly protested the proposed cuts, which come directly on the heels of the 1997 Balanced Budget Act's $44 billion cut in reimbursements. Richard Pollack, executive vice president of the American Hospital Association, said, "The print of the balanced budget act is hardly dry. This is going to exacerbate the hurt that is already being felt by hospitals and health systems in providing care to patients." When the MedPAC report was published last month, hospitals protested that the commission's cost assessment gave an overly rosy picture of hospitals' financial health. Pollack said the White House "is failing to take into account that, even though inpatient profits are high, hospitals are losing money on other kinds of services" (Goldstein, 1/8).
In related news, the Clinton administration yesterday "declined to endorse" the premium support proposal made yesterday by National Bipartisan Commission on the Future of Medicare Chairs Sen. John Breaux (D-LA) and Rep. Bill Thomas (R-CA). However, White House Press Secretary Joe Lockhart left the door open for future approval. He said, "Premium support programs are something that the federal government does, [b]ut we do know that there's a lot of (such programs) out on the marketplace. Some of them are very good, some of them are not so good, so I think it's important that we look at the details of what the commission will be looking at" (CongressDaily, 1/7).
On The House Agenda
An advisor to House Majority Leader Dick Armey (R-TX) said yesterday that although "House Republicans are generally, philosophically, well disposed toward defined contributions" and "would very much like to try it," premium support will face a tough battle on the House floor if it doesn't receive the national bipartisan commission's recommendation. Armey health care advisory Dean Clancy said that passage of premium support without the recommendation would be "touchy and difficult." (ReutersHealth, 1/8). Speaking at the same forum on the prospects for health care reform in the 106th Congress, Congressional Budget Office Director June O'Neill noted that a radical shift to a FEHBP-like program faces two problems: It can be "easily demagogued and would require the strong support of the president from his "bully pulpit" to ensure passage. She emphasized that the chances of overall, far-reaching reform are uncertain (AHL, 1/7).