White House, hospitals reach deal on health care
July 8, 2009
WASHINGTON – The nation’s hospitals will give up $155 billion in future Medicare and Medicaid payments to help defray the cost of President Barack Obama’s health care plan, a concession the White House hopes will boost an overhaul effort that’s hit a roadblock in Congress.
Vice President Joe Biden announced the deal at the White House on Wednesday, with administration officials and hospital administrators at his side. Yet on Capitol Hill, Democratic senators were in open rebellion over a proposed new tax on health care benefits.
“Reform is coming. It is on track; it is coming. We have tried for decades to fix a broken system, and we have never, in my entire tenure in public life, been this close,” Biden said. And, in a firm message to lawmakers, Biden added, “We must – and we will – enact reform by the end of August.”
Obama has set an ambitious timetable for legislation, with the hope of signing a comprehensive bill this fall. But lawmakers returned Tuesday from their July 4 break with deep misgivings about the benefits tax – a key element in the discussion – and questions about many parts of the complex legislation.
Under a proposal being considered in the Senate, workers would have to pay income taxes on the value of their health insurance, once it exceeded a certain level yet to be determined by Congress. Republicans favor such a tax as a way to slow medical costs. Without it, prospects for a bipartisan deal in the Senate could be in jeopardy.
Yet Democrats are resisting the tax.
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Sen. Christopher Dodd, D-Conn., said the tax has little support. “I don’t see it as having any viability,” Dodd told reporters Wednesday after a floor vote.
Senate Democrats are “pretty much ruling it out,” said Sen. Olympia Snowe, R-Maine, a moderate who has been negotiating across party lines. “We have to really, I think, go back to the drawing board on some the issues and try to see where we can achieve greater cost savings.”
But time is running out: Lawmakers may be more reluctant to vote on the a charged issue of health care next year, when all House seats and one-third of Senate seats are up for election.
One Democrat, Senate Finance Commitee Chairman Max Baucus of Montana, has long championed a tax on health benefits as the best way to pay for health care while simultaneously restraining the growth of the cost of coverage in the future. But the idea has strong opposition from organized labor, a core Democratic constituency. House Democrats have also been highly resistant, and Obama himself campaigned hard against it in last year’s presidential race.
The deal with the hospitals – the one bright spot right now for Obama – may also be on shaky ground. Officials said it’s linked to the Senate Finance Committee legislation that Baucus is negotiating, and whose prospects are uncertain. It would follow concessions from drug companies and an announcement by Wal-Mart last week that it would support an employer requirement to help pay for health care.
Some of the $155 billion in projected savings from hospitals touched off a controversy within the medical community.
About $50 billion would come from reducing federal payments hospitals receive for providing care to uninsured and low-income patients. Those payments are now made through the Medicare and Medicaid programs.
But public hospitals and children’s hospitals, which serve many low-income patients, said such cuts would harm local communities. The National Association of Public Hospitals and Health Systems and the National Association of Children’s Hospitals, who were not directly involved in the talks, said in a joint statement: “Such reductions could severely damage safety net providers if not carefully crafted.”
“This is essential funding that supports trauma centers, burn care units and medical training,” said Melissa Stafford Jones, president of the California Association of Public Hospitals.
Hospitals would also get something out of the deal. They won an agreement that if the Finance Committee’s legislation includes a public health insurance plan, it would reimburse hospitals at above the rates Medicare and Medicaid pay, which hospitals have long complained are insufficient.
House Republican Leader John Boehner of Ohio criticized the hospital deal, saying it was negotiated out of public view. “The administration and congressional Democrats are literally bullying health care groups into cutting back-room deals to fund a government takeover of health care,” Boehner said in a statement.