Tea Party conflicted?

Today the U.S. House is to vote on extending the payroll tax cut for working Americans and extending the federal unemployment benefits.  Both are important measures to keep the nation’s economic momentum going. 

Unfortunately, instead of paying for these efforts by a slight surtax on incomes over $1 million as proposed by Senate Democrats and supported by over 70% of the public, the GOP bill tries to pay for their $200 billion legislation through spending cuts. 

Hospitals have already weighed in with their opposition to cuts that will affect them (and us in the form of higher healthcare costs) as reported in The Hill today.

The hospital provisions include a $10.6 billion cut to federal reimbursements for bad debts; a $6.8 billion cut to payments for hospital outpatient department evaluation and management services; a $4.1 billion cut to payments for hospitals that see a disproportionate share of people without insurance; and an extension of caps on therapy services to outpatient hospital settings, which saves the government another $1.7 billion. Hospitals only account for about 60 percent of federal reimbursements for bad debt

Another group closely associated with the GOP also should not be happy—the Tea Party.  The House plan isn’t fully paid for.  According to scoring by the Congressional Budget Office the “GOP bill would add $25.3 billion to the federal deficit over the next 10 years.” 

The odd thing is that unlike the hospitals that have come out publicly against the GOP bill because of the cuts to their revenue, the Tea Party has been quiet.  They might be working behind the scene to oppose the deficit spending in the bill but it sure would be nice to let the public hear that their principle of reducing the deficit applies to both parties.

Medicaid feeds economy

Today the South Carolina House of Representatives begins debating the 2011-12 state budget. One important issue will be how to address Medicaid funding—reduce state funding and thus lose up to hundreds of millions in federal dollars or adopt a plan by the hospitals for them to pay extra into the Medicaid program to avoid the loss of federal funds.

In the letter below The South Carolina Small Business Chamber of Commerce weighed in on the issue with House members.
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March 14, 2011

Dear Representative:

Earlier this month we asked that the Legislature take a more business approach to budgeting in regard to spending cap legislation. As you begin the budget debate this week, no better example of a decision requiring a business approach will be the issue of Medicaid funding.

Some have expressed concern that taxpayers must be protected from increased taxes. However, the bigger fear for the small business owner is less money circulating through our economy that creates consumers. Starving our local economies hundreds of millions of dollars will worsen the economy at the very time it appears to be improving. If small businesses need protection, it is from a state-inflicted loss of customers.

Our hospitals have made a good business proposal to keep federal Medicaid funds from being dramatically reduced to our state and thus reducing the financial impact to themselves. By increasing their contribution to the state’s Medicaid program, they can help keep federal funding to our state from being dramatically reduced.

The importance of this to our small businesses is twofold. First, while our large urban hospitals might be able to weather reduced Medicaid compensation with few layoffs, the same is not true for our rural hospitals. These will certainly need to scale back their personnel costs regardless of the wishful predictions of those with little or no business experience. There will definitely be a negative economic impact on our rural communities and their small businesses struggling to survive.

Second, fewer Medicaid dollars for any health care provider will mean increased cost shifting to those with insurance. The fact that all of us with health insurance are paying for the uncompensated care of others is a primary reason for rising health insurance costs. Intentionally increasing this upward pressure on premiums, at a time when small businesses are hard pressed to offer employees health insurance due to costs, runs counter to the Legislature’s positive efforts to make health insurance more affordable (ex. raising the cigarette tax).

We strongly encourage you to accept the Medicaid funding proposal by the hospitals. It is a good business decision for them and for our small businesses.

Sincerely,

Frank Knapp, Jr.
President & CEO