Once Seen As Victors Of Health Reform, Hospitals Now Turning Against Democrats In The Midterms

hospitalmoneyJon Walker notices that the American Hospital Association — which had agreed to accept $155 billion in payment reductions over ten years if health reform covered at least 94% of Americans and didn’t include a public option — is now turning against the administration and “spending hundreds of thousands of dollars to help elect Republicans this November.”

On one hand, the news is not too surprising. The industry believes that helping elect Republicans will probably bring about looser regulations and less strenuous spending cuts from the Independent Payment Advisory Board (IPAB), which the GOP has promised to repeal. On the other hand, while all of the health care interest groups won important concessions from the new law, none were more successful than the hospital industry. During the 15 months beginning in January 2009 and ending in March, when Congress passed the Affordable Care Act, hospitals spent approximately $108 million on lobbying and got a lot for their effort.

Here are the cuts they accepted:

– 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: Currently the government pays about $45 billion dollars a year in DSH payments to help hospitals afford uncompensated care. Since health care reform will insure 34 million Americans over a 10-year period, the number of ‘uncompensated’ care cases will decrease by as much as 80%, but DSH payments will only be cut by some 15%.

But, as the Tennessee Hospital Association’s (THA) concluded, the above cuts would still allow hospitals to net about $16 billion from reform. “The breakdown estimates that the industry will receive additional money of about $171 billion over those same 10 years as a result of reimbursements for newly insured patients…In other words, the hospitals would give up $155 billion in cost cuts, but take in $171 billion in new money — a net gain of $16 billion. What’s more, the Tennessee association notes that the deal delays most of the industry’s cost givebacks until the second half the agreement’s 10-year year period — well after the hospitals have enjoyed some of the benefits of the new money they’re expecting from expanded insurance coverage.”

“[T]he bond prices and stock prices will tell you that most hospitals are winners, at least in this bill,” Thomas Scully, who ran CMS from 2001 to 2004, explained at a recent roundtable for Health Affairs. “Assuming there are no subsequent bills, hospitals are probably the biggest winners. They got hardly touched and got a lot of new money,” Scully said.

Hospitals are also protected from cuts under IPAB through 2019 — but as their latest political manoeuvrings suggest, that still wasn’t good enough. After all, why tolerate any cuts — no matter how far into the future — when you there is a good chance that you can help elect a party that will make them all go away?