Healthcare providers should fight any further attempts by Congress to slash Medicare payments, a move that is looking increasingly attractive to Republicans intent on reviving a tax cut in 1999.
Many of these GOP stalwarts want to steal a page out of President Clinton's playbook by using hospitals and other providers to fund their folly. Remember that when the Balanced Budget Act of 1997 mandated $122 billion in spending reductions over five years, $116 billion came out of Medicare's budget. Furthermore, 90% of the Medicare reductions will be achieved through cuts in payments to healthcare providers.
Although it's true that many hospitals are making a nice buck treating Medicare inpatients, outpatient services aren't nearly as profitable. And we wonder what kind of profit margins defense contractors, office supply vendors and others doing business with the federal government are earning.
But for now, healthcare remains the biggest and most convenient target. The American Hospital Association is leading the move to head off further Medicare reductions to finance a tax cut. Other healthcare trade groups should actively support the effort.