Hospitals Take Pay Cut To Ease Health Bill Cost
Joe Biden and Rich Umbdenstock - Vice President Joe Biden speaks alongside Rich Umbdenstock, president of the American Hospital Association, about a White House deal with hospitals to help pay for a new health care system. (AP)
Groups representing the nation's hospitals have joined the drug industry in pledging billions of dollars in forgone profits to help finance a health system overhaul. But what are they getting in return?
Perhaps a little less pain, says Richard Kirsch of Health Care for America Now, a consumer group working for a health overhaul bill. "The thing we have to do with health care reform is lower health care costs, which means that drug companies and hospitals and others will have to make less money than they would have," says Kirsch. "And with these deals, they get a chance to say how they make less money, as opposed to Congress and the president basically shoving it down their throats."
The hospital deal, announced by Vice President Biden, will trim payments to hospitals by some $155 billion over the next 10 years if a health overhaul bill gets passed and signed into law.
(AP)
"Today's announcement, I believe, represents the essential role hospitals play in making reform a reality," said Biden at an event where he was flanked by executives of the largest hospital industry groups. "And a reality it will be. We must enact this reform this year."
But are hospitals really giving up all that much? Maybe not.
A significant portion of the funds are currently for payments to help hospitals offset the cost of caring for patients who are uninsured. But in a newly reconfigured system, "there will be fewer uninsured," says Kirsch, "and it makes perfect sense that as the number of uninsured drop, that hospitals should get less money from the federal government for taking care of those people if they now are paying customers."
In other cases, industry groups may be using the deals they cut with one branch of government to play off against another. For example, last month, the drug industry group Pharmaceutical Research and Manufacturers of America, known as PhRMA, agreed with Senate Democrats and the White House to devote some $80 billion over the next decade to the overhaul effort.
Kirsch says the deal will actually benefit consumers, because PhRMA will use the money to cut prices on drugs for seniors on Medicare.
And PhRMA President and CEO Billy Tauzin, himself a former congressional committee chairman, says he was happy to be able to help structure the industry's contribution in a way drug companies could live with. "Pain is better than death — every day," joked Tauzin.
But now PhRMA is using its deal with the Senate to fend off efforts in the House to extract even larger discounts for low-income Medicare beneficiaries. What the industry has already pledged is "a big sum of money. It ought to be enough," Tauzin says.
Some Democrats say the industry groups are getting off too easy — that they will in fact make money on the overhaul effort, since they will get more paying customers when more people have insurance.
But Kirsch is taking a more philosophical view.
"In an ideal world, which didn't have 600 and umpteen drug company lobbyists, and all the lobbying and political clout of these interest groups, consumers could get a better deal," he says.
"But," he adds, "in the real world of American politics, to have interest groups come to the table and make an agreement that will lead to much more accessible, affordable health care for American consumers really is an accomplishment."
And, he adds, to have potentially powerful opponents not out running millions of dollars of advertisements or paying lobbyists to try to kill the overhaul effort is priceless.
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MELISSA BLOCK, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.
ROBERT SIEGEL, host:
And I'm Robert Siegel. Another day, another deal. The White House has reached an agreement with another key health care industry group. Today, it was the nation's hospitals who agreed to pony up some $150 billion over the next 10 years. The money would help cover the costs of an overhauled health care system. Today's deal follows one reached last month, with the drug industry volunteering to take a pay cut. NPR's Julie Rovner reports on what these deals might mean to consumers and to the prospects for getting a health bill passed.
JULIE ROVNER: With President Obama in Europe, Vice President Biden got to give the ritual pep talk, surrounded by smiling hospital CEOs who just volunteered to give up billions - with a b - of government funding over the next decade.
Vice President JOE BIDEN: Today's announcement, I believe, represents an essential - the - represents the essential role hospitals play in making reform a reality. And a reality it will be. We must enact this reform this year.
ROVNER: But how much are the hospitals really giving up? If things work out as expected, maybe not that much. For example, says Richard Kirsch of the consumer group Health Care for America Now, hospitals currently get billions of dollars to care for patients who can't pay because they don't have health insurance. But under a new system, he says?
Mr. RICHARD KIRSCH (Health Care for America Now): There will be fewer uninsured. And it makes perfect sense as the number of uninsured drop, that hospitals should get less money from the federal government for taking care of those people if they now are paying customers.
ROVNER: In other cases, it appears that industry groups may be playing some negotiators in the health care overhaul debate against others. Take the drug industry. Last month, the industry group PhRMA announced a deal with the White House and Senate Democrats to put up some $80 billion towards the cost of the overhaul effort, largely by cutting costs for seniors and Medicare.
PhRMA President and CEO Billy Tauzin, a former member of Congress, said he was happy to, as he calls it, structure his industry's pain.
Mr. BILLY TAUZIN (President and CEO, PhRMA): It's a good model. If you can sit down with those who are writing legislation regarding your industry and get the results that you want, but in way that is more palatable, that you can live with, you still succeed around, then that makes sense.
ROVNER: And in the case of the drug industry deal, says Kirsch, the funds pledged will actually benefit consumers directly.
Mr. KIRSCH: They're actually going to be lowering drug prices and passing on some of those savings to senior citizens so that seniors will have lower drug prices on Medicare.
ROVNER: But there's a dark side to the deal, too. Consumers could be saving even more money if House Democrats have their way. But Tauzin admits he's now using the deal he cut with the Senate to fight off efforts in the House to force drug makers to provide even deeper discounts.
Mr. TAUZIN: We've come in very high, and, you know, that should be the limit. We shouldn't have to be asked to double up, if you will, anywhere.
ROVNER: That's outraged some Democrats, who think the industry groups are getting off too easy, particularly because many health care providers stand to make more money than they're giving up in these deals if more people have insurance coverage. But consumer advocate Kirsch said this is a process where no one gets everything they want. And it's better to have potential opponents inside the tent rather than outside, spending millions on negative advertising.
Mr. KIRSCH: In an ideal world, which didn't have 600 and umpteen drug company lobbyists, and all the lobbying and political clout of these interest groups, consumers could get a better deal. But in the real world of American politics, to have interest groups come to the table and make an agreement that will lead to much more accessible, affordable health care for consumers really is an accomplishment.
ROVNER: But none of these deals means anything unless there's a bill passed and signed into law. And given the current pace of Congressional negotiations, that's one deal that's by no means done.
Julie Rovner, NPR News, Washington. Transcript provided by NPR, Copyright National Public Radio.
