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What the Debt Ceiling Crisis Means to Healthcare

Karen Minich-Pourshadi, for HealthLeaders Media, August 15, 2011

It's no secret that the debt ceiling crisis is worrisome for healthcare. In blunt terms, Medicare reimbursements stand to be eviscerated.

The U.S. government, to balance the budget would need to cut spending by about 40% and Medicare represents 23% of the Federal budget. Moreover, the whole debt crisis situation is a perfect opportunity for political posturing and negotiating. All of that adds up, unfortunately, to Medicare being a ripe target for scrutiny and cuts.

Standard and Poor’s released a report last week, titled The Deficit Remedy Could Be Toxic for U.S. Health Care Companies. In it the ratings agency notes, the “U.S. debt crisis has put a fire under the government's efforts to slow growth in healthcare spending.”

S&P goes on to calculate that with the Centers for Medicare & Medicaid Services (CMS) estimating Medicare costs are currently $556 billion (or 3.6% of GDP), up from $247 billion (or 2.6% of GDP) under the elder care program just 10 years ago. Unfortunately, the idea of curbing Medicare expenditures further is going to be problematic for all providers’ bottom lines; especially

on the heels of the 2010 Affordable Care Act’s previous decree for a $155 billion reduction in Medicare payments to hospitals over 10 years.

The proposal Congress approved two weeks ago is expected to slash about $2.4 trillion from the national debt from 2012 through 2021. About $917 billion in cuts would be identified in the budget process, and $1.5 trillion in reductions would be found by a special, 12-member, bicameral, bipartisan commission. 

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