Some healthcare leaders are backing the work of a Boston-based think tank to make a novel argument for further Medicare reimbursement increases: Provider payment restraints enacted as part of the Balanced Budget Act of 1997 hurt the entire economy.
The argument runs counter to government analysis, which claims that the balanced budget has spurred economic growth by reducing interest rates and making more money available for investment.
MODERN HEALTHCARE last week learned of the Task Force on Science, Health Care and the Economy's research to buttress providers' claims that Medicare payment policies have thrown the healthcare sector into economic disarray. The think tank has not publicly disclosed the project.
Although it consists of only six individual members, the task force in the past has played a leading role in pushing the federal government to beef up funding for the National Institutes of Health, which has seen its budget increase nearly 73% since 1993.
The think tank's members include some high-profile executives in the healthcare and research fields, including Herbert Pardes, M.D., president and chief executive officer of New York-Presbyterian Healthcare System; Charles Vest, president of the Massachusetts Institute of Technology; and a top executive for the biotechnology firm Chiron, which manufactures drugs, vaccines and blood tests.
In a report it hopes to present to Congress and the White House in May or June, the task force intends to show that the budget law has impeded growth, for example, by drying up revenue available to pay staff, purchase equipment and fund research that results in new healthcare technology.
A lack of investment in new medical technologies could affect the treatment of disabilities that shorten workers' careers, decreasing productivity.
The group highlights what it says is the danger that research won't be funded, interfering with innovation in biotechnology, which is one of the fastest-growing sectors of the economy.
"If you destroy the health industry, you're going to destroy the market," said Arthur Ullian, the task force's chairman and president of the National Council on Spinal Cord Injury. "The ripple effect has just started."
The task force is relying on universities as well as the Greater New York Hospital Association and the national consulting firm Ernst & Young to carry out the research.
The only project the task force is paying for is an Ernst & Young study of how worker disabilities affect tax revenues. The undisclosed cost is being covered by the Biotechnology Industry Organization, which represents biotechnology and pharmaceutical firms.
The task force has asked the Greater New York Hospital Association to analyze hospital costs, revenue and margins to paint a picture of economic conditions in the healthcare delivery system, Ullian said.
Major Washington hospital groups, including the American Hospital Association and the Federation of American Health Systems, were mum about the merits of the task force's approach.
The task force represents a new tack in the continued campaign to roll back the 1997 budget law, which aimed to reduce expected Medicare expenditures by $112 billion between 1998 and 2002 by trimming growth in provider payments.
Until now, providers have argued that the slower growth in fees will force them to cut back on essential services to Medicare beneficiaries.
The task force's work raises philosophical questions about Medicare's role. Started as a health insurance program for senior citizens, Medicare has come to be viewed by some as a source of funding for research, education and capital costs.
The effort also represents new risks regarding the credibility of the healthcare industry, which is under strain as it tries to fight off efforts to force reporting of medical errors and lobby for better Medicare reimbursement.