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AHA Supports Reconciled Healthcare Reform Bill, But with Caveats

Janice Simmons, for HealthLeaders Media, January 8, 2010

As Congress starts its work on reconciling the two healthcare reform bills, the American Hospital Association (AHA) said in a letter to lawmakers Thursday that it "strongly supports" keeping the level of coverage proposed in the House bill—96% of all individuals legally residing in the U.S. (as opposed to 94% projected in the Senate bill).

However, if that level of coverage cannot be offered, then hospitals' contribution to "financing healthcare reform in the form of payment cuts should be reduced," AHA wrote in the letter to House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV). AHA is referring to its agreement last summer to give up about $155 billion in Medicare and Medicaid funding over the next decade to help the nation's uninsured.

In particular, shared responsibility of individuals and employers will "be critical in achieving coverage for all," AHA said in the 27-page letter. AHA urged the conferees to make certain that the final bill "balances a mandate" for individuals to obtain coverage with a strong requirement that employers continue to participate in providing healthcare coverage for their employees.

With the individual mandate, AHA said the House bill "holds the greater promise" by providing a "strong individual mandate" tied to 2.5% of modified adjusted gross income "with limits and appropriate exceptions for certain individuals."

In terms of a public insurance option, AHA is recommending that the conferees adopt the approach in the Senate bill that calls for creation of "state based, non public, nongovernmental healthcare co operatives and non public, multistate health plans." These alternatives offer "the needed opportunities for more affordable health plans while preserving market based approaches with negotiated provider rates," AHA said.

The creation of a public option to compete in an insurance exchange to individuals and businesses could put "tremendous pressure on provider payment rates"—even if the plan paid negotiated rates as proposed in the House bill.

This would "only exacerbate the underpayment of hospitals" by Medicare and Medicaid, AHA said. In 2008 alone, the combined underpayment for the hospital services provided to Medicare and Medicaid beneficiaries was $32.4 billion in 2008—which comes at a time when hospitals are being asked to do more, AHA noted.

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