HHS report on healthcare reform: Up to 15% of providers could fall into the red

Share this content:
Salaries increase for DONs, administrators
Salaries increase for DONs, administrators

Medicare cuts under the new healthcare reform law could add 12 years of solvency to the program—but they may also be unrealistic and need to be scaled back, according to results of a new study from the Department of Health and Human Services.

The HHS report suggests that up to 15% of Medicare hospitals and other providers could slip into the red due to the cuts.

New fees on manufacturers of prescription drugs, reduced Medicare Part A costs and an increase to the Hospital Insurance payroll tax will extend solvency of the Part A trust fund until 2029, HHS' Office of the Actuary reported Thursday. Additionally, Medicare beneficiaries will see their co-pays and premiums for skilled nursing and hospital stays under both Part A and Part B decline over the next decade. However, these savings “cannot be simultaneously used to finance other Federal outlays (such as the coverage expansions under the [healthcare reform law]) and to extend the trust fund,” the report says.

The addition of roughly 34 million newly insured individuals in part through an expansion of Medicaid and Medicare is likely to increase overall healthcare spending by slightly less than 1%, or about $311 billion over the next decade, according to the HHS report. That percentage could climb if cuts to Medicare turn out to be unsustainable.

The Office of the Actuary acknowledged in its report that some new tax measures, including a tax on high-priced insurance plans, were not taken into account, and noted that those provisions could help reduce costs after 2020. The Obama Administration responded, saying that these sorts of reports frequently underestimate the effectiveness of cost-saving measures, the Associated Press reported.