Hospitals' unseemly lobbying campaign

The hospital lobbyists pushing the Senate to adopt the House version of the One Big Ugly Bill are falling into a GOP trap.

Hospital lobbyists are swarming around Republican senators this week in hopes they will soften the direct cuts to hospital funding contained in the Senate version of Trump’s Gut-Medicaid-to-Give-Tax-Breaks-to-the-Rich legislation.

“Hospitals are now lobbying senators to return to the House’s version of the bill,” according to reporters for StatNews. Oh, you mean the House version that will cut 11 million from Medicaid rolls over the next decade? Force another 4 or 5 million people into the ranks of the uninsured by limiting subsidies for Obamacare plans? And impose sharp cuts in food assistance (all of which are also in the Senate bill)?

Forgive me for not being impressed by dropping “unusual” from the cruel and unusual punishment for the less well-off that is contained in both versions of the bill.

Moreover, by focusing on limiting the hits to their own top and bottom lines, the hospitals are ignoring the far greater damage that will be done not just to the poor but to their best paying customers — the privately insured. Either version of this legislation will drive the uninsured rates back into double digits.

That in turn will cause uncompensated care levels at hospitals to rise dramatically since people without insurance wait until the last minute — when their illnesses require greater attention with poor results — before seeking what turns out to be far more costly care. Hospitals then charge higher rates to the privately insured to make up for those losses and maintain their profit margins.

The system works well for posh urban and suburban hospitals with fewer Medicaid patients and a high proportion of the well-insured. But it’s not a viable option for urban safety net or rural hospitals, which have few private pay patients because they predominantly serve populations on Medicare and Medicaid.

The benefits of a hidden tax

The hospital lobbyists’ attention has zeroed in on the Senate Finance Committee’s inclusion of limits on state-imposed provider taxes, which are levied in 49 states. They are imposed to inflate hospital costs, a tactic that increases federal reimbursement to the states. States then rebate the taxes and more to the hospitals.

It’s a subterfuge, for sure. And in an ideal world where all payers paid the same rates, it would be unnecessary. But in reality, where Medicaid pays the lowest fees for hospital stays and physician visits, such subterfuges became one way for safety net and rural hospitals that are more heavily dependent on Medicaid to keep their doors open and maintain essential services.

The hospital lobbyists are also fighting to maintain “state directed payment arrangements,” which allow hospitals in some states to charge commercial rates for their Medicaid patients. Those rates are usually 2 to 3 times higher than government rates.

According to this recent StatNews report, at least 15 states benefit from this program, which costs the federal government an estimated $110 billion a year. The proposed legislation in both houses would eliminate such payments for states that expanded Medicaid under the Affordable Care Act and limit them to 110% of Medicare funding in the 10 (all Red) states that didn’t — a brazen act of partisan political favoritism.

Red states are already far more dependent on federal largess when it comes to cost-sharing for the joint state-federal program. That’s because the Center for Medicare and Medicaid Services adjusts the formula for federal matching assistance based on the ratio of a state’s per capita income to the national average. States with low wages, few benefits and no unions pay less in federal taxes and get more in federal Medicaid support; states with higher wages pay more in taxes and get less from the feds.

Here’s a chart ranking the federal dependency level of each state:

Falling on deaf ears

The unseemly lobbying campaign by hospitals’ two main lobbying groups (the American Hospital Association, which represents so-called non-profits; and the Federal of American Hospitals, which represents for-profit hospitals) has not generated much sympathy from Republicans on the Hill.

“Hospitals are rolling in the dough,” Sen. Ron Johnson (R-WI) told Modern Healthcare. “I would also say to anybody who’s designed their business model depending on federal government funding: Get a new model.”

Sen. Rick Scott (R-FL), who once ran the for-profit HCA Healthcare, dismissed the hospital lobbyists’ concerns. “People say, ‘Well, my hospital is not doing very well,’” he said. “Give me the financial statements. I’ll be glad to go through them.”

To maintain Republican unity, Senate leaders are toying with including a special fund to bail out rural hospitals — a FEMA-like response to the hurricane of their own making. The fund could range from $10 billion to $25 billion, according to Modern Healthcare, which might be sufficient to keep senators like Josh Hawley (R-MO), Susan Collins (R-ME) and Lisa Murkowski (R-AK) in line.

While hospitals continue to pay lip service for protecting Medicaid, encouraging the Senate to pass the House version of the bill would be a disaster for the coalition of patient, consumer, trade union, and public interest groups fighting against it. It would put the full bill on Trump’s desk without having to go to conference committee, where a handful of moderate Republicans could at least try to ameliorate some of the Medicaid cuts.

“We don’t want to cut anybody’s benefits,” Sen. Shelley Moore Capito (R-W. Va.) told Modern Healthcare. “This president said that. I’ve said that. But we’ve got to have a system that’s preserved for those who deserve it and are qualified for it.”

So far, her boss in the White House or his underlings aren’t listening. On Friday, CMS under Trump-appointee Mehmet Oz finalized a rule that will result in throwing more people into the ranks of the uninsured. The rule shortens the open enrollment period this fall for signing up for Obamacare plans. It also canceled the special rolling enrollment period for low-income people, and made it harder for plan participants to prove they qualify for subsidies.

While hospitals search for their own private bailout, the coalition fighting against the bill continues to hammer away at the legislation’s impact on rural hospitals in hopes it might convince three Republican Senators or just a couple of GOP backbenchers in the House to scuttle the bill.

"A rural hospital fund might be a good idea on its own, but not as a band-aid to cover the gaping wound this budget bill would create, with the biggest cut in history to Medicaid,” said Anthony Wright, executive director of Families USA. “Since Medicaid is also the primary payer for maternity wards, nursing homes, and so much of the health system we all rely on, these massive Medicaid cuts will be felt by all facing scaled-back services and outright closures of key health providers-- especially in rural parts of the country.”

The GOP long ago gave up caring about budget deficits when they are in power. Why should they balk at dropping some or all of the bureaucratic roadblocks designed to force people off Medicaid? The half trillion dollars it would add to the deficit over the next decade is bupkus compared to the $2 trillion addition to deficit spending caused by allowing the ultra-rich to maintain their tax breaks.