Obama's Health Care Proposal Worries Hospitals

by Mark Friedman  on Monday, Oct. 3, 2011 12:00 am  

On Sept. 19, President Barack Obama released his plan to reduce the nation's deficit by $3 trillion during the next decade. Part of his proposal called for a $320 billion reduction in federal spending on Medicare and Medicaid.

The blueprint drove fear into hospital administrators in Arkansas and around the country; hospitals are already preparing for $155 billion in health care cuts that were part of 2010's Affordable Care Act and go into effect during the next several years.

Of the $155 billion, some cuts have already been made, but "those reductions will accelerate [next] fiscal year," said Marie Watteau, a spokeswoman for the American Hospital Association in Washington, D.C. The federal fiscal year starts Oct. 1.

The American Hospital Association said Obama's proposal to the Joint Select Committee on Deficit Reduction would result in reduced care and at least 200,000 job losses for hospitals by 2021, according to a Sept. 19 AHA news release.

"This is the wrong prescription to create a healthier America and sustain job growth in a sector of the economy that is actually adding jobs," Rich Umbdenstock, president and CEO of the AHA, said in the news release.

Others, however, say that the deficit is out of control and the cuts are needed.
"I think the president is giving people a little advance notice of just how serious this health cost problem is, and we're not going to get out of it without some sacrifices," said John Rother, CEO of the National Coalition on Health Care of Washington, D.C. The coalition is a nonprofit working to achieve health system reform.

Obama also proposed to reduce Medicare payments to teaching hospitals by $9 billion during the next 10 years. That proposal has made officials of the University of Arkansas for Medical Sciences nervous.

In Arkansas, hospital administrators are concerned about the proposed cuts, fearing they could lead to some hospitals closing, said Paul Cunningham, the senior vice president of the Arkansas Hospital Association.

"When you start looking at what the supercommittee [the Joint Select Committee] could do in terms of discretionary spending and making additional cuts in Medicare and Medicaid, I think everybody is a little bit worried," he said.

The prospect of more Medicaid cuts is troubling, Cunningham said.

Arkansas is in its third year of receiving a Medicaid provider tax for hospitals, he said. The money brings in about $140 million annually and has helped most hospitals post a net profit for their fiscal years that ended in 2010.

Without the Medicare and Medicaid reimbursement revenue, "we'd have to close the hospital," said Dede Obar, the administrator of Mercy Hospital of Scott County in Waldron.



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