Obama plan to cut hospital payments draws ire

The Obama administration has called for $200 billion in cuts for hospital reimbursements in an effort to overhaul the health care system.

Federal funding under the reimbursement system known as 'disproportionate share payments' is provided to hospitals in large part to help meet the cost of caring for the uninsured. Administration officials argue that as the number of uninsured decrease, reimbursements should also fall. However, hospital leaders and staff worry about such cuts as well as calls for a government-run insurance plan to compete with private plans.

In an interview with NPR, Peter Orszag, director of the White House's Office of Management and Budget, defended the plan, saying it will put the U.S. "on a path to eliminating the number of uninsured people in the United States." Orszag says opposition is inevitable that that "evidence suggests that many insurance markets lack adequate competition, and the goal of the public plan is to expand choice, introduce more competition and drive down premium costs." NPR reports that: "Hospital officials say that will result in cuts in services to the people who need it most."

On "All Things Considered," NPR spoke with Rich Umbdenstock, president and CEO of the American Hospital Association who has expressed disappointment about the plan. Umbdenstock tells NPR "that the hospitals have accepted "in principle" that reimbursements from Washington will decline as the number of insured patients rise at those institutions. But, he says, too many questions remain." Such questions include when coverage will kick in, at what level and across what proportion of the uninsured population. Umbdenstock also emphasized the need to look at reform in context with affordability, coverage and quality (Norris and Siegel, 6/16).