Hospitals say Medicaid cuts are 'totally unprecedented'

Hospital trade groups condemned the Senate tax bill, and now they made a desperate push for at least some changes before the legislation goes to President Trump.

Chip Kahn, president and CEO of the Federation of American Hospitals, said the Senate tax bill's cuts to Medicaid are unprecedented. Hospitals are hoping lawmakers will make some changes before the bill goes to President Trump.

The Senate narrowly signed off on the tax package Tuesday, and hospitals have said it was even more problematic than the House bill that they also opposed. The Senate was deadlocked 50-50, with three Republicans voting against it, and Vice President Vance casting the decisive vote. Hospitals hoped the Senate would offer some relief, but they contend the Senate took a bad proposal from the House and made it worse.

They warn that millions of vulnerable Americans will lose Medicaid coverage, and some communities may lose hospital services. The House signed off on the package Thursday, sending it to President Trump.

Chip Kahn, president and CEO of the Federation of American Hospitals, tells Chief Healthcare Executive® that the legislation’s cuts to Medicaid and impact on hospitals isn’t being overstated.

“These reductions are totally unprecedented,” Kahn says.

“There's no question there'll be some closures,” he says. “And maybe even worse, because it could be much broader spread. There's going to be reassessment and services will have to be narrowed.”

Hospitals called it both a moral failure and a body blow to many struggling hospitals, and they warned that some hospitals would have to cut services and some may not survive.

Hospitals cited the 11.8 million Americans that are projected to lose Medicaid coverage in the next decade, according to estimates from the Congressional Budget Office. Another five million could lose coverage under the Affordable Care Act, as subsidies supporting coverage are slated to expire at the end of the year.

Critics warned that more people without insurance will end up in emergency rooms, and hospitals would face more cost pressures treating people with no ability to pay.

The American Hospital Association blasted the package for cutting Medicaid by nearly $1 trillion, calling it the biggest reduction to the program ever proposed by Congress.

Rick Pollack, president and CEO of the American Hospital Association, urged the House to make some changes in the final legislation. He said in a statement that the package “will result in irreparable harm to our health care system, reducing access to care for all Americans and severely undermining the ability of hospitals and health systems to care for our most vulnerable patients.”

“It will force hospitals to make service line reductions and staff reductions, resulting in longer waiting times in emergency departments and for other essential services, and could ultimately lead to facility closures, especially in rural and underserved areas,” Pollack said.

The measure also includes work requirements for some healthy Americans to receive Medicaid benefits, and some would have co-pays. The legislation would also put limits on state provider taxes, which states have used to bring in more federal Medicaid dollars.

‘Devastating impact’

Sister Mary Haddad, president and CEO of the Catholic Health Association of the United States, denounced lawmakers for approving a package that she said would have “devastating impact” to those most in need.

“It is shameful that Congress has once again prioritized the interests of the wealthy over the needs of millions of vulnerable Americans,” Haddad said in a statement.

“This bill inflicts deep harm on essential community health and social safety-net programs, threatening the survival of rural hospitals and long-term care facilities,” Haddad said. “It places additional financial strain on already overburdened health care providers and state budgets.”

Hospitals have repeatedly voiced concerns about the impact of the package on rural hospitals, since about half of all hospitals in rural areas are losing money, analysts say.

The Senate inserted a $50 billion fund to support rural hospitals in the final package. The funds would be distributed over a five-year period. Hospital leaders said that they appreciated some recognition of the needs of rural hospitals, but they said that fund likely wouldn’t have much impact.

“I think it's a band-aid,” Kahn says. “It's limited in scope, and it's limited in time, and the damage done by this legislation to rural hospitals will be something that extends over the entire life of the law.”

“Frankly, I know of hospitals in rural areas that will be losing millions of dollars of revenue due to these cuts, and their share of any kind of program is going to be a few hundred thousand dollars,” he added.

Healthcare leaders have said they are alarmed at the prospect of millions of Medicaid recipients losing coverage, and expect many of those patients are going to show up in emergency rooms.

But hospitals have also sought to convince lawmakers that the impact of cuts would affect many Americans who don’t rely on Medicaid. If local hospitals shut down or cut services like labor and delivery, then the impact is far wider than those who need Medicaid.

“I think there's a domino effect that will take place here,” Kahn says. “It goes way beyond Medicaid. And it's not simply a question of the services or obviously, whether a hospital keeps their doors open or not. It’s going to affect the ability of hospitals to treat other patients.”

Hospitals are going to lose more money, and costs for other patients could rise, he said.

“That's going to have to be made up by the payments from other patients, because hospitals have to make up the slack to provide the care that's expected,” Kahn says.

Cuts threaten ‘survival of hospitals’

Statewide hospital groups said the tax reform package would reduce access to care and place more pressure on hospitals.

The Virginia Hospital & Healthcare Association said the state’s hospitals would lose more than $2 billion annually and said Medicaid cuts “jeopardize the stability and survival of hospitals.”

“It is likely that several hospitals, including those serving rural parts of Virginia, could end up closing in that scenario. Others may have to cut services or reduce employment, which would limit patient access to care,” the association said in a statement.

Nicole Stallings, president and CEO of the Hospital + Healthsystem Association of Pennsylvania, said the bill will “destabilize Pennsylvania hospitals and communities. This legislation puts health care access, jobs, and economic competitiveness in jeopardy, especially in our rural communities.”

“More than half of the commonwealth’s acute care hospitals are operating in the red because payments already do not reflect the actual cost of providing care,” Stallings said in a statement. “They cannot absorb a cut of this magnitude, and some will have no choice but to reduce services or close.”

Some House Republicans have expressed some unease with the scope of the Medicaid cuts in the Senate bill. The House passed its version of the tax bill by only one vote last month.

President Trump said he wanted the legislation finished by July 4. Kahn hoped for the chance to reduce some of the pain in the final package.

“We’re obviously trying to turn that around because of the impact this is going to have on coverage and care,” Kahn says.

(Note: This story was updated to reflect the House of Representatives passing the tax bill on July 3.)