Medicare Cuts Could Slash 278K Hospital Jobs, Warns AHA

Medicare funding cuts under consideration by Congress could cost the nation's hospitals $61.4 billion over the next decade, forcing them to trim their payrolls of nearly 278,000 jobs, the American Hospital Association said this week.

The reimbursement reductions detailed in H.R. 3630 would take funding from hospitals and use it to cover the deficit created by the extensions of the Social Security tax holiday and unemployment benefits, and by the so-called "doc fix" that aims to address cuts to physician reimbursements .

An analysis done for AHA by the researcher firm Tripp Umbach determined that if the provisions of H.R. 3630 were implemented, hospitals could see a reduction in funding of nearly $20 billion, along with about 83,000 job losses.

In addition, the study found that the mandatory sequestration that is scheduled to go into effect in 2013 could cost hospitals another 194,000 jobs and more than $40 billion in funding.   

"Cuts in funding for hospital care will threaten jobs at a time when our nation needs to be creating jobs, not eliminating them," AHA President/CEO Rich Umbdenstock said Wednesday in a media release.  "H.R. 3630 would lead to further job loss in hospitals, an ill-advised move in these tough economic times."

The Bureau of Labor Statistics reported this month that hospitals created 89,100 jobs in 2011, more than double the 37,300 jobs hospitals created in 2010.

In addition, AHA officials fear that hospitals may be caught in the political crossfire between the Obama administration and the Republican-controlled House. The AHA supported the Affordable Care Act and agreed to about $155 billion in funding cuts over the next decade in exchange for expanding healthcare coverage.

"The $155 billion was really tied to coverage expansion—that as coverage expands, there will be 31 million more people covered under Medicaid and the private exchanges and that provides an offset to some of the cuts in the $155 billion," Caroline Steinberg, AHA's vice president of trends analysis, told HealthLeaders Media.

Republicans on the House Ways and Means Committee, however, have openly dismissed the AHA's claims as alarmist. Last month the GOP leadership on the committee issued a press release stating that the cuts proposed by H.R. 3060 represented 0.5% of the $2.6 trillion in projected Medicare spending over the next decade, "hardly a 'major reduction.'"

"Not so long ago, the major hospital trade associations endorsed and strongly supported legislation that became law.  It contained $155 billion in hospital Medicare cuts—more than 10 times the reductions in H.R. 3630," the GOP media release said.

A GOP staffer on the Ways and Means Committee told HealthLeaders Media Thursday that the House leadership stands by the points made in the media release.

Steinberg says hospitals are "very concerned about how this is going to shake out between figuring out ways to fund the physician fix."

"We are already facing a 2% sequester and then of course even with the sequester there will be more deficit reduction in the coming years. On top of that hospitals are seeing a lot of pressures from states on the Medicaid front," she said.  

AHA officials fear the cuts in H.R. 3060 are a continuation of a larger assault on the nation's hospitals.

"The $155 billion that AHA put on the table for the Affordable Care Act was our attempt to show that it had to be a sacrifice for everybody," AHA Board Chair Teri Fontenot, the president/CEO of Woman's Hospital in Baton Rouge, LA told HealthLeaders Media.

"If you are going to get something—which we wanted more insurance coverage for uninsured patients—then you have to be willing to give something up. But everybody has a stake in this and each group ought to be looking at how they can work together."

"There really is a problem here financially, but to continually go after one segment of healthcare over and over again is patently unfair and enough is enough. That is why we are pushing back so hard on this right now," Fontenot says.   

Fontenot adds that hospitals are hoping not to fall victim to the Beltway partisan politics.

"The healthcare sector is always in the cross hairs. It is such a huge piece of the federal budget and the federal deficit," she says. "And because the government is somewhat removed from providing the services. They've got the providers and the payers between that. I don't think they can appreciate the impact because they aren't working personally with the recipients."

She said hospitals are trying to play it down the middle and "work with everybody in Congress." That starts at the local level.

"We are constantly encouraging our members to work closely with their Congressional delegation members and staff, particularly when they are at home," she says. "We need to put pressure on them at home and explain to them very articulately what the consequences of the aggregate decisions that are being made at the federal level. It needs to be brought down to the patient level and how it affects that member of Congress's constituents, regardless of party affiliation."