Children's hospitals object to proposed funding reductions
The nation's children's hospitals are lobbying Congress to change a provision in the pending health care legislation that industry leaders say will reduce their federal funding by as much as $876 million.
Hospital groups in July agreed to a $155 billion reduction in federal payments over 10 years, part of a broader effort to lower medical costs. But those cuts would have a lopsided effect on children's hospitals, the industry's trade group says, and could cause deep reductions in services.
"It's going to have a huge impact," said Jim Kaufman of the National Association of Children's Hospitals. "You're leaving children's hospitals holding a financial bag."
Dennis Smith, a senior fellow at the conservative Heritage Foundation, countered that children's hospitals are well compensated by other federal programs. The proposed cuts, he said, amount to a drop in "extra revenue ' and of course, they don't want to give that up."
At issue are proposed reductions in federal "disproportionate share hospital" payments that reimburse hospitals for care they provide to the uninsured and those enrolled in Medicaid, a federal health insurance program for low-income Americans.
General hospitals plan to offset the cuts with an expected increase in patients who would have insurance under the legislation. The Congressional Budget Office predicts 36 million Americans who would not otherwise have insurance will gain coverage under the House of Representatives' health care bill.
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But children's hospitals serve a high share of patients on Medicaid, which pays hospitals less than private insurance. And, because of past government efforts to insure children, most of them already have coverage ' meaning children's hospitals have less to gain from an increase in the number of people with insurance.
About 90% of children had health insurance in 2008, compared with 80% of people ages 18-64, according to the Census Bureau. That leaves 7 million children under 18 without coverage.
"Keep in mind that children's hospitals don't have that much of a margin to start with," said Jim Dahling, CEO of the Children's Hospital of The King's Daughters in Norfolk, Va.
In a statement, House Energy and Commerce Committee Chairman Henry Waxman, D-Calif., said many lawmakers "were very concerned about the potential negative impact of reducing ' payments to safety-net hospitals." He said the cuts, if approved, would not take effect until 2017. "This will give the Congress time to re-evaluate and make a midcourse correction" if necessary.
Legislation approved by the Senate Finance Committee would reduce funding to children's hospitals by $876 million, the trade group estimates. The House bill would trim it by $395 million.
The children's hospital association and 31 of the nation's largest children's hospitals spent more than $4 million on lobbying this year, according to disclosure forms filed with the Senate.
Smith said children's hospitals would survive the cuts because they receive adequate payments from Medicaid. Randall O'Donnell, CEO of Children's Mercy Hospitals and Clinics in Kansas City, Mo., said Medicaid covers 76% of a hospital's costs. He said the number falls to 67% if the subsidies are cut.
Seven Republican and 22 Democratic lawmakers signed a letter to House Speaker Nancy Pelosi asking her to reconsider the cuts. Though the reductions would be years off if approved, Rep. Glenn Nye, a Virginia Democrat who crafted the letter, said, "I don't want to leave this to chance."
