Amid the clatter over President Bushs healthcare proposal unveiled last week was a strong cry of opposition from hospitals and systemsand safety net hospitals in particular.
Executives from hospitals and health systems argue that if the plan is enacted, it would rob sorely needed federal funds from hospitals that care for a large number of indigent patients while potentially undermining the foundation for healthcare reimbursement: employer-based healthcare coverage.
The plan would have a potentially devastating impact on hospitals and patients, said John Bluford, president and chief executive officer of Truman Medical Centers, which includes two academic medical centers that function as safety net hospitals, in Kansas City, Mo. Bluford said Truman Medical could go under over time if Bushs plan were enacted.
Specifically, Bluford pointed to a provision in the proposal that would redirect federal funds now used for disproportionate-share fundswhich reimburse hospitals serving a large number of uninsuredto help states provide basic private health insurance to the poor.
The other key measure in the plan would change the tax code to make all health benefits received from employers taxable, while creating new standard healthcare tax deductions of $7,500 for a single filer and $15,000 for families.
In his speech, Bush said that changing the tax code would be a vital and necessary step to making healthcare affordable for more Americans, and that it would level the playing field for those who do not get health insurance through their jobs.
His ideas captured the backing of influential healthcare groups Americas Health Insurance Plans, the American Medical Association and the American College of Emergency Physicians.
But Bushs proposal, which was previewed to the media just before he officially unveiled it on national television, sparked immediate criticism from several stakeholders in and outside the Beltway. Opponents claim it would destroy the employer-based system of care and would do little to help people in low tax brackets. Robert Greenstein, founder and executive director of the liberal think tank Center on Budget and Policy Priorities, called it an ill-designed proposal that would erode incentives for employer-based coveragethe primary means of pooling healthier and sicker Americans together to keep insurance affordablewithout providing an alternative way of effectively pooling risk.
In addition, many questions remain about the implementation and long-term effects of Bushs proposal. An HHS spokeswoman wouldnt comment on the proposals timeline or if the initiative to redirect disproportionate-share money to the states would appear in the presidents fiscal 2008 budget request for HHS.
White House officials have said on Jan. 1, 2009, they want to begin phasing in the tax provisions, which they describe as being budget-neutral over 10 years,. However, the overwhelming lack of support, plus the fact that the president would have to rely on a Democratic-led Congress to revise the tax code to make part of the proposal a reality, indicates this may be another healthcare fix to hit the cutting-room floor.
From everything I heard, the people in charge are not interested in taking this up. It doesnt look like this has traction, said Richard Pollack, executive vice president of the American Hospital Association, which opposes the plan.
Sen. Hillary Rodham Clinton (D-N.Y.) in particular hit upon the consequences of redirecting disproportionate-share money to the states, a measure that would affect public safety net and community health centers that rely on that money.
Bushs plan is for HHS Secretary Mike Leavitt to work with Congress to take these existing federal funds and use them to create Affordable Choices grants. These grants would give our nations governors more money and more flexibility to get private health insurance to those most in need, Bush said. But for the safety net hospitals like Truman that use these disproportionate-share funds to pay for the uninsured, this would essentially pull the rug out from under these facilities, argued Richard Umbdenstock, president of the AHA.
The California Hospital Association estimates that the states safety net hospitals could lose approximately $700 million a year for the next three years if this initiative went through.
Likewise, the Safety-Net Association of Pennsylvania voiced opposition to the plan. The group is very supportive of the idea of expanding insurance, said Mike Chirieleison, its executive director. However, insurance coverage does not guarantee access to healthcare. If you dont adequately reimburse the providers of those services, access will likely be threatened. Using Medicaid DSH (disproportionate-share) dollars to finance coverage will further erode the ability of safety net hospitals to care for these populations unless reimbursement rates substantially improve, said Chirieleison, who added that Pennsylvania Medicaid now pays for only 75% to 80% of the care provided for Medicaid enrollees by those hospitals.
In Kansas City, the money Truman gets from disproportionate-share payments helps fund its Medicaid patients along with the droves of uninsured who get care at its facilities, Bluford said. Even with that assistance, the hospital in 2006 still had to provide $80 million in uncompensated care at costup 40% from $57 million in 2005, Bluford said. Truman, with annual revenue of $400 million, gets 55% of its revenue through Medicaid, he said.
In addition to potentially robbing the safety net hospitals of their disproportionate-share funds, the new proposal only supplies a tax breakit doesnt create new insurance policies that people could afford, said Ralph Muller, CEO of the University of Pennsylvania Health System, an academic and safety net operation in Philadelphia. Some people with legal-status issues, such as illegal immigrants, wont be encouraged to apply for insurance under this plan, yet theyll still come to our emergency rooms for care, Muller said.
Other CEOs voiced similar complaints.
Victor L. Campbell, an HCA senior vice president, said the Bush plan would hit hospitals hard. We do not support anything that would undermine hospitals, which serve as a safety net for millions of Americans. Instead of redirecting funds away from hospitals, it makes more sense to strengthen Medicare and Medicaid, he said.
Charles Barnett, president and CEO of the Seton Family of Hospitals, Austin, Texas, said he applauded Bush for including healthcare in his remarks, but added that the nation has yet to tackle the underlying problem. I think a tax structure can be part of a larger solution, but not the only solution.
The dialogue that occurs is how we finance healthcare, rather than how healthcare is organized. Were not having a deep enough dialogue about the healthcare system in the United States and what we can do about making it more effective, including prevention and community wellness.
But John C. Goodman, president of the National Center for Policy Analysis, claims that hospitals arent seeing the return on investment that Bushs proposal could offer. As it stands now, hospital free care dollars are encouraging patients without insurance to go to the emergency room, Goodman said. On average, $1,500 of free care is spent for each full-time uninsured person per year, and that equals $6,000 for a family of four thats uninsured, he said. If more people became insured through this proposal, hospitals would see fewer ER patients who cant pay their bills, he said.