Hospitals align with Obama Administration's health reform, forgoing $155B

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A collection of hospital industry groups, accompanied by U.S. Vice President Joe Biden and Health and Human Services Secretary Kathleen Sebelius at a White House press conference on Wednesday, agreed to accept $155 billion less in reimbursements from the federal government in an attempt to ensure that healthcare reform will be deficit-neutral.

"As part of this agreement," Biden explained, "hospitals are committing to contributing $155 billion in Medicare and Medicaid savings over the 10 years to cover healthcare cost reform." He said that as "more people are insured, hospitals will bear less of the financial burden of caring for the uninsured and the underinsured, and we'll reduce payments to cover those costs, in tandem with that reduction."

The hospital associations agreed to receive about $100 billion less in Medicare and Medicaid payments, and about $40 billion less in compensation for treating the uninsured. The intentions for the remaining $15 billion in reductions were not revealed. According to the agreed-upon terms, the public health insurance plan, if passed by Congress, would take several years for enough individuals to enroll for the reduced rates to become effective. Also, Administration health officials have assured the hospital groups that the public plan would pay more than Medicare or Medicaid.

The American Hospital Association (AHA), the Federation of American Hospitals (FAH), the Catholic Health Association and the Community Health Systems have agreed to the plan. Richard Umbdenstock, president and CEO of the AHA, Richard Bracken, president and CEO of Hospital Corporation of America, Sr. Carol Keehan, president and CEO of Catholic Health, and Wayne Smith, president and CEO of Community Health attended the conference. Bracken represented the FAH.

The Washington Post reported that a "source close to the negotiations said a deal was struck after discussions about the shared responsibility of the entire healthcare system--including doctors, insurers, individuals and the government--and an understanding that each part of the system would sacrifice to make it work."

In a similar agreement, pharmaceutical companies agreed in late June to foot the bill for $80 billion in Medicare drugs over the next decade.