Amidst all the worrying and hand-wringing over the fiscal cliff, the resolution of which was not kind to hospitals, perhaps another nugget of news escaped your radar screen this fall—the combined number of people enrolled in Medicaid and Medicare now exceeds the number of full-time private sector workers in the United States.
CNSNews.com, an arm of the conservative Media Research Center, makes its case based on publicly available statistics from the Centers for Medicare & Medicaid Services and the Bureau of Labor Statistics.
To wit: In 2011, the latest period for which data is available, 70.4 million people were enrolled in Medicaid for at least one month. Also, 48.849 million people were enrolled in Medicare that year, which equates to a gross combined 119.249 million.
Though there is no current information on dual-eligibles, those eligible for both programs and thus susceptible to double-counting, in 2008, dual-eligibles made up about 15% of the total, which would mean by 2011, about 10.56 million dual-eligibles would be enrolled in both programs. That would leave a net of about 108.69 million enrolled in Medicare or Medicaid or both.
That compares to 112.56 million people working full-time in the U.S. in 2011, and about 94.75 million who work in the private sector, according to the Bureau of Labor Statistics.
Though there's nuance associated with the figures, those are staggering statistics simply because they confirm that more and more of hospitals' operating income in the future will be coming from government sources, and the commercially insured will be less and less able to subsidize relatively poor reimbursements from government sources.
Not that you aren't already aware of that, but it figures to get much worse. In fact, arguably one of the bigger groups of losers in the recent negotiations over the fiscal cliff was hospitals, which face additional payment reductions that they likely haven't planned for.
That means you have to pay increasing attention (I bet you think you couldn't possibly pay more attention) to what Congress does to reimbursement and what the rest of the federal and state regulatory bureaucracies do to those government-sourced reimbursements.
We're currently at $16 trillion in national debt and counting. Even governments that control the world's reserve currency have to pay attention to that. Don't they?
As we approach yet another likely Congressional stalemate surrounding whether to increase that roughly $16 trillion debt ceiling—since that was not resolved during the recent last-minute bargaining to avert the fiscal cliff—you can bet that hospitals, and healthcare in general, will face increasing scrutiny and will present an attractive target for lawmakers going forward.
Fortunately, hospitals and chief executives, by and large, have gotten this message. Several have told me in the past several months that "these are the good old days" and that reimbursements will never again be as relatively high as they are now.
With a few notable exceptions, they're working on the assumption that they need to get their expenses down by about 30% to survive on current Medicare rates. What they don't and can't know, entirely, is whether that will be enough.
How quickly those reimbursement rates will be ratcheted down, and by what means, leads to planning for a rainy day in the dark. It's just not possible to anticipate how far the cutting will go. As a result, many smaller hospitals are getting out of the game. The current high level of consolidation in hospitals is evidence enough for that. After all, there's no more draconian solution to long-term survival than giving up your independence.
In any case, don't look for quick or easy answers on how much will be enough. If recent history surrounding Congressional budget negotiations is any indication, there are none.
Philip Betbeze is the senior leadership editor at HealthLeaders.