David MHA
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Congressional Budget Office: Options for Reducing the Deficit
Report Analysis Chapter 5
2017-2026
Report Analysis Chapter 5
2017-2026
This paper, covers an analysis, interpretations and impact issues that are relevant to an Acute Care
Facility, which focuses on a facility that provides medical care for a significant number of inner city, aged and indigent populations. The conclusive interpretations, are addressing the issues of most impact, in that theater of Patient Care Operations.Emerging from this “Deficit Reduction Proposal” by the Congressional Budget Office are three broad
based options:- The Imposition of caps on Federal spending for Medicaid
- A change in the cost-sharing rules for Medicare with restricted allowable Medigap Insurance
- A new CBO policy of reductions in tax preferences for employment-based health insurance
Another explored option is a conversion of Medicare, to a Premium Support System, replacing a full
service-line benefits package with a fixed spending amount contribution, from the Federal Government Health Plan Budget, despite the actual spending needs of the Patient based on illness. This option, would ultimately require, either more out-of-pocket Patient spending to cover the short-fall, or a resulting neglect of healthcare needs due to a lack of affordability, impacting predominantly Patients within the middle, and lower income sectors, including the poor.Under a premium support system, the federal government would replace the Medicare beneficiaries’
guaranteed benefit package, with a fixed dollar amount or “defined contribution”, that beneficiaries would apply toward their health care coverage. The impact on Medicare beneficiaries, when moving to a premium support system are:- A guaranteed set of Medicare benefits will end
- Medicare Patients will pay more for premiums
- Again, more costs will shift to beneficiaries over time
Lower income Patients will bear the most impact, leading to reduced access to care, and catastrophic
out-of-pocket medical expenses (Flowers, 2017).The Congressional Budget Office, also considers that The Patient Protection and Affordable Care Act
(ACA) will transition into higher penalties for individuals who do not engage in healthcare coverage, essentially “opting-out” of coverage (CBO, 2016). This will take advantage of the loophole that was created when many Patients realized that the fines were less costly than the coverage, ostensibly utilizing the Emergency Room for healthcare services. As in the past, these ER Patients are protected my EMTALA Laws that prohibit facilities from withholding services, due to a Patients inability to pay, which places an additional burden on the facility’s financial resources.Although the CBO follows current laws, in constructing baseline projections for individual components
of this form of “discretionary spending”, as required under section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985, its baseline projections of overall spending, will in fact, incorporate these caps and automatic spending reductions, already put in place by the Budget Act.These caps, either have to be revised, rejected by a new vote on spending as detrimental, replaced with
alternatives, or rescinded in their entirety, pending new legislation. Large reductions such as these, among the States annual revenue potential and expectations, and ostensibly trickling down cuts within the healthcare industries revenue cycles, will occur, due to spending caps and benefits reductions, in addition, higher healthcare contributions will be forced, and required by the Patient population.An increase in the ratio of indigent Patients will result from higher Premiums, penalties and the creation
of stricter and more pervasive caps. In addition, the return to a higher migration of Patients utilizing the ER under EMTALA protections, triggering more losses for Acute Care facilities, where DSH funding, compensation will have been eliminated under the circumstances of these proposed options.It should be noted, that the original rationale for the Medicare Disproportionate Share (DSH) payment
adjustment was to compensate hospitals for the higher operating costs they incur in treating a large share of low-income patients. Low-income Medicare patients tend to be sicker and costlier to treat than other Medicare patients with the same diagnosis. Higher costs also result from the need for additional staffing and services, such as translators and social workers, to care for low-income patients (Commins, 2018).Over time, however, a second justification for the DSH adjustment emerged. Many policy makers now
view the purpose of DSH payments more broadly. Most agree that DSH funds preserve access to care for Medicare and low-income populations by financially assisting the hospitals they use.Most of the CBO options presented in Chapter 5 of the Budget Report, would either decrease spending
by the Government, to stabilize healthcare coverage, or increase taxes to meet projected spending needs. The CBO also suggests that States can further subsidize healthcare spending to cover the shortfall. Conversely, that would increase State taxation needs. However, the Federal Government matches State Medicaid spending on healthcare, which would (in effect) impact State contributions to a smaller amount by virtue of strategic financial balance. Under current law, the Federal and State Governments, share in the financing and administration of Medicaid.Finally, some provider options could shift the sources, or types of health insurance coverage, or cause
different types of healthcare to be sought and delivered, i.e., budget changes that will inevitably trigger a shift in traditional providers, from conventional vendors, to alternative providers that will deliver similar medical services at lower costs.References
CBO (2016, December) Congressional Budget Office: Options for Reducing the Deficit
COMMINS, J. ( 2018, FEBRUARY 12) Safety Nets Cheer DSH Cuts Delay
Flowers, L., Komisar, H., Lind, K., Noel-Miller, C., and Purvis, L., (2017, JANUARY 9) Premium Support and the
Impact on Medicare Beneficiaries