What does a total reduction of the magnitude of $255 billion ($155 billion plus $100 billion) really amount to over 10 years? Even under a very conservative assumption of 5% annual growth in combined Medicare and federal Medicaid spending for hospital care, that $255 billion “cut” translates to an average annual reduction in the rate of increase in federal hospital spending of less than 0.5% a year.
Under the debt-ceiling law, as Burda indicates, healthcare providers will be lucky if the trigger is pulled and they experience cuts in their Medicare payment rates of 2% a year. We believe that they won't be so lucky, or at least not for long. The Standard & Poor's downgrade of the U.S. government's credit rating will put enormous pressure on the new congressional “supercommittee” to look for much greater savings over 10 years than the $1.5 trillion minimum.
S&P has stressed that overhauling entitlement programs is “key to long-term fiscal sustainability” and that the debt-ceiling deal “envisions only minor policy changes in Medicare.”
So it's time to not only talk facts but also face facts. The U.S. economy has changed significantly, and for the worse, and we need to exercise real leadership in helping our country, our constituencies and our communities cope in this new world. Let's recognize that the Medicare and Medicaid programs are huge contributors to federal spending and that our nation's fiscal health requires that these federal programs, as well as many others, must change with the times.
The only questions are how and how quickly. The answers may or may not be in the best interests of the major national hospital and physician associations, whose dues revenue is dependent on a continued need to lobby Congress and federal bureaucrats on behalf of members over administered rates levels and related policies.
Whatever directions are taken, let all of us in healthcare show our country what we can do, individually and in collaboration with others, to live within those parameters and help our country live within its means. That is real value. So is protecting the public and private not-for-profit hospitals and other healthcare providers that serve as the true “safety net.” If the “haves” don't help the “have-nots,” the “haves” will ultimately bear the burden one way or another that the “have-nots” are carrying for them.
If charitable hospitals across the country were able to cope before the advent of the Medicare and Medicaid programs in the '60s, we have every faith that they will be able to cope with whatever lies ahead if they demonstrate real value to their communities.