Healthcare Business News

AHA sees risks in GOP budget plan

By Jessica Zigmond
Posted: April 5, 2011 - 3:00 pm ET

The House Republicans' budget proposal to cut hundreds of billions in Medicare and Medicaid funding over the next 10 years would have negative consequences for both patients and healthcare providers, the leader of the American Hospital Association said Tuesday.

“We think it's going to severely impact access for seniors and vulnerable citizens of the Medicaid program,” Richard Umbdenstock, president and CEO of the AHA, told Modern Healthcare.

On Tuesday, House Budget Committee Chairman Paul Ryan (R-Wis.) released his panel's fiscal 2012 budget, which aims to cut $6.2 trillion in government spending over the next decade compared with President Barack Obama's budget for next year; bring non-security discretionary spending to below 2008 levels; and reduce deficits by $4.4 trillion over 10 years.

The budget's spending outlays over the 10-year timeframe total about $40 trillion, which represents about 20.5% of the nation's gross domestic product, based on a10-year average.

As Ryan announced earlier, the plan would convert Medicaid funding to block grants for states and change Medicare to employ a model that allows beneficiaries to choose from a list of plans.

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The plan seeks to cut more than $730 billion from Medicaid and nearly $390 billion from Medicare compared with the president's budget over the next 10 years. When compared against the bipartisan Congressional Budget Office's baseline, the plan would cut about $771 billion from Medicaid in the next 10 years, and about $30 billion from Medicare. As Ryan said earlier, his plan would continue to increase funding for Medicare starting in 2012, but at a slower rate than the current pace.

For the Medicare program, the budget outlines a so-called premium-support system, a plan that members of Congress have currently. It would allow beneficiaries starting in 2022 to choose from a list of plans. “Medicare would then provide a payment to subsidize the cost of the plan,” said the budget resolution, which Republicans have titled, “The Path to Prosperity.” “In addition, Medicare will provide increased assistance for lower-income beneficiaries and those with greater health risks,” the budget resolution said.

According to Umbdenstock, the AHA recognizes that the Medicare program needs to be reformed, but said the organization does not have a formal position on the merits of the premium-support system. The association's regional policy boards will evaluate this model as the AHA receives more detailed information on it from the House Budget Committee, he added.

In a news release, Reps. Sander Levin (D-Mich.) and Pete Stark (D-Calif.) said the model is similar to a voucher plan that Ryan had proposed earlier.

“If it looks like a voucher plan and acts like a voucher plan, it is a voucher plan,” the statement said. “But don't tell that to Budget Chairman Paul Ryan, who like former Ways and Means Chairman Bill Thomas before him, is trying to rebrand a bad idea that will turn Medicare into a voucher program. This time he's reverting to the voucher plan's original name, “premium support.”

Regarding Medicaid, Umbdenstock said he views block grants as one way of cutting the program.

Meanwhile, the budget maintains the GOP promise to defund the Patient Protection and Affordable Care Act, as it would cut $1.4 trillion in funding for the law, also over the next 10 years. In a statement, the AHA said the budget framework “also wrongly rolls back expansions of health coverage to millions of people but keeps the $155 billion in reductions to hospitals contained in the health reform law.”

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