Medicare Cuts Will Slash Healthcare Jobs, AHA Says

Earlier this month, senior leaders in the American Hospital Association descended on Capitol Hill to do their job -- lobby Congress to protect hospital funding from budget cuts.

Unfortunately, the hospital executives made a tactical error when they suggested that raising the Medicare eligibility age would be preferable to foisting more reimbursement cuts on hospitals.

That idea, one of 40 or so alternatives proffered by the hospitals, did not originate with AHA. That didn't matter. As soon as AHA aired it, they owned it.

Critics didn't see the three dozen or so other suggestions. The fact that the nation's hospitals would endorse cutting services for the elderly in the name of "shared sacrifice" and as an alternative to their own budget cuts immediately created bad will and adversaries both within Congress, and the public.

Stung by the backlash, the AHA now is pursuing a different, smarter tack.

In an Oct. 17 joint letter to the 12 members of the Joint Select Committee on Deficit Reduction Congressional – aka the "Super Committee" – AHA President Rich Umbdenstock, AHA Chairman John W. Bluford, American Nurses Association President Karen Daley, and CEO Marla Weston played up the financial stability that the nation's 5,000 or so hospitals provide in their communities. The two trade groups then warned the Super Committee that any significant cuts to Medicare or Medicaid "could create devastating job losses in our communities."

"While we recognize the serious fiscal pressures facing our nation, we feel it is counterproductive to target hospitals and the healthcare field for significant spending reductions at a time when we are providing economic stability and job growth in a sluggish economy," the ANA/AHA letter said.

This is a great tactic for several reasons –the best reason of which is that it's true. Now, instead of throwing other healthcare constituencies under the budget cut express, AHA/ANA are making a strong case for why they should be left unharmed.

And the fact is, the healthcare sector is an incredible job-creating machine. Any town with a doctor's office, a critical-access hospital, or a level-3 trauma center has a stake in this game. AHA and ANA are wise to bring this to the attention of lawmakers, all of whom have any number of respected and influential healthcare providers in their districts who will be hurt by Medicaid or Medicare cuts.

A little perspective: President Obama went to Detroit last week to tout the auto industry bailout, which by some estimates saved about 1 million jobs. Hospitals employ 5.4 million people. The healthcare sector employs more than 14 million people. That does not include the millions of "ripple effect" workers whose jobs are affected by the healthcare sector.

As I wrote earlier this month, U.S. Bureau of Labor Statistics data show that healthcare is creating jobs at a pace not seen in four years and is responsible for nearly one in four new jobs in the overall economy so far in 2011, and is on a pace to create 344,000 new jobs by year's end.

In September, I noted, healthcare employment rose by 43,800 jobs, representing roughly 42% of the 103,000 payroll additions in the overall economy. The 258,000 new healthcare jobs represent 24% of the slightly more than 1 million non-farm jobs created in 2011.

The case for healthcare job creation gets stronger if you consider that much of the September growth outside of healthcare was credited to the end of a two-week strike in August affecting about 45,000 telecommunications workers at Verizon. If those returning Verizon workers were factored out of the September growth, then healthcare would be responsible for 75% of the 58,000 new jobs in the economy for the month.

Those are jobs -- and voters -- in 50 states, in every city, in every town. With an election year looming, and at a when Republicans and Democrats say they are making job creation a top priority, AHA/ANA is making sure these lawmakers – and the public -- understand who is creating the jobs, and why their success shouldn't be messed with.

The AHA has estimated that the 2% reduction in Medicare payments that would be imposed automatically on Jan. 1, 2012 if the Super Committee can't come up with mandated budget cuts would cost hospitals about $41 billion through 2021. With labor consuming more than two-thirds of hospital spending, AHA says its calculations show that Medicare cuts would cost nearly 200,000 hospital jobs over the next decade.   

You can argue whether or not the growth in healthcare sector jobs is good for everyone outside of healthcare. That job growth, after all, plays a part in fueling the nation's runaway and unsustainable healthcare expenditures, which now account for about 18% of gross domestic product.

That is a legitimate argument. But that is policy. This is politics. This is about defending your turf. This is about protecting your interests. It's a fight that hospitals and nurses can take to every home district in Congress. It's smart.