Hospitals changed their lobbying tack last week in the wake of new congressional spending estimates that will allow Medicare to pay hospitals $18 billion more through 2010 than originally expected.
Rather than focusing on changes in Medicare spending forecasts--as they have so far this year--hospitals turned their rhetorical aim last week to the Congressional Budget Office's ever-increasing projections of the federal surplus as they seek to boost Medicare payments.
With billions more flowing into their coffers, providers will find it harder to argue that the Balanced Budget Act of 1997 is still shortchanging them. However, it could be easier to argue for a piece of the growing surplus.
Last week, the CBO projected the surplus will total $4.6 trillion over the next 10 years. That's up from the $3.2 trillion the office projected six months ago.
At the same time, the 10-year Medicare spending numbers also increased. In January, the CBO projected 10-year Medicare spending of $3.2 trillion. But in its mid-year update last week, the office upped the total Medicare spending by about $18 billion, or 0.5%.
That marks the first time since the balanced-budget act was enacted that Medicare spending figures actually have risen.
However, hospitals last week chose to focus on the increase in the CBO's 10-year projections of the share of the surplus not resulting from Social Security tax collections, called the "on-budget surplus," which has risen to $2.2 trillion today from about $893 billion in April under the most pessimistic scenario.
"We've doubled the on-budget surplus," said Herb Kuhn, vice president of advocacy for the Premier hospital alliance. "We believe (the surplus projections) give us a green light. What we've said all along is that new money for Medicare should come from the surplus."
"Congress and the administration have the resources to reverse the damage caused by the balanced-budget act," Richard Davidson, president of the American Hospital Association, said in a written statement.
While acknowledging the Medicare spending numbers dampen the healthcare sector's arguments for increased provider payments, Thomas Scully, president and chief executive officer of the Federation of American Hospitals (formerly the Federation of American Health Systems), said he remained confident that Congress and the White House will allot new Medicare money to providers.
It will be driven by the combination of continued grass-roots lobbying by providers that claim they're being shortchanged by Medicare, President Clinton's proposal to boost provider payments by $40 billion over 10 years (June 26, p. 2) and the new budget surplus numbers, Scully said.
The new Medicare spending estimate "takes the argument from being overwhelming to pretty strong," he said. "There's enough momentum for (budget-act) relief."
Nearly all of the increase in the surplus projections result from higher tax revenue, which result in turn from continued growth in the country's economic output, the CBO said.
Last year, hospitals and other providers lobbied successfully for a package of $16.1 billion in Medicare, Medicaid and state children's health insurance program payment increases. That was to reverse the effects of the 1997 budget law, which aimed to reduce projected Medicare spending by $112 billion between 1998 and 2002.
Providers have gone back to Capitol Hill this year claiming that was not enough, with hospitals seeking another $25 billion.