Hospitals, White House reach accord on cuts to pay for reform

Major hospital groups reached an agreement Monday with the White House and Senate Democrats to accept $155 billion in payment cuts over ten years, a concession that would help pay for proposed health care reforms, the Washington Post reports.

Government savings would come mainly from lower Medicare and Medicaid payments to the hospitals, and smaller subsidies for providing care to the uninsured. Hospitals expect to make up some of the losses by increasing their volume as anticipated reforms bring health insurance to many of the 47 million Americans who don't have coverage.

"A source close to the negotiations said a deal was struck after discussions about the "shared responsibility" of the entire health-care system -- including doctors, insurers, individuals and the government -- and an understanding that each part of the system would sacrifice to make it work," the Post reports (Connolly and Shear, 7/7).

The agreement is "the latest step in an on-going effort by the White House to win concessions from major industry groups" to pay for an overhaul expected to cost around $1 trillion, the New York Times reports. "In addition to controlling costs and helping [President] Obama achieve his goal of providing coverage to more than 40 million uninsured Americans, the administration's tentative agreements with drug companies and providers, including hospitals and doctors, are also intended to bring pressure on the private health insurance industry."

The hospital groups involved – the American Hospital Association, the Federation of American Hospitals and the Catholic Health Association – had earlier protested Obama's plan to slash $220 billion from their payments over a decade, Kaiser Health News reports. In exchange for their support, the hospitals negotiated the smaller cut and assurances from the administration and Senate officials that the cuts would be "timed to coincide with expanded insurance coverage. However, the pact doesn't prevent the House from demanding bigger cuts, according to people who are familiar with the negotiations. Still, industry insiders are hoping that, by reaching agreement and creating good will with the White House and Senate Democrats, they'll have influential allies arguing on their behalf when the House and Senate meet in a conference committee this fall" (McGinley and Galewitz, 7/7).