Critic Disappointed At Health Care Proposal

As part of its effort to overhaul the health care system, the Obama administration has called for billions of dollars in cuts in hospital reimbursements. Rich Umbdenstock, president and CEO of the American Hospital Association, has expressed disappointment and concern at the call.

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ROBERT SIEGEL, host:

Now Rich Umbdenstock, who is president and CEO of the American Hospital Association. Welcome to the program.

Mr. RICH UMBDENSTOCK (President and CEO, American Hospital Association): Good afternoon, Robert.

SIEGEL: You were one of the stakeholders who met with President Obama at the White House last month and pledged, I thought, to take steps to save the nation more than two trillion dollars in health care spending over the next 10 years. Since then, the Obama administration has called for cuts of a couple of hundred billion dollars in hospital reimbursements. You've expressed disappointment and concern. Can hospitals reduce spending or not?

Mr. UMBDENSTOCK: Well as part of that effort at the White House, we pledged to do our part. That was a very aggressive national goal and the specific issue was what could we do that didn't require a legislation. And I think it was a good exercise in that sense and some significant commitments, including ours, came out of it. Now the issue of cuts is a very different issue, in that you have to look at cuts in the context of a complete plan for reform. And our elements in reform include the important element of affordability.

SIEGEL: Mm-hmm.

Mr. UMBDENSTOCK: But also, we have to think about coverage. We have to think about quality. We have to think about connecting the system and health ideas. One example of how that might be enabled…

SIEGEL: You mean electronic…

Mr. UMBDENSTOCK: Electronic - sorry…

SIEGEL: Electronic medical records keeping.

Mr. UMBDENSTOCK: Correct, yes.

SIEGEL: But we could think about those things - and it might take decades to change a national culture regarding wellness, and when we see the doctor and for what purpose. In the meantime, we're spending $2.3 trillion a year on health care reform. Can the hospitals cut spending soon?

Mr. UMBDENSTOCK: I think all stakeholders have to examine what they can do now. So, very definitely, hospitals already are working hard at improving quality and the related costs. That's been going on now for several years and we want to see that not only continue but pick up in pace.

SIEGEL: Let me ask you about what Peter Orszag, the OMB Director, said which is that, it would be a double payment to your member hospitals to both reduce the number of the uninsured and also maintain the current level of reimbursement. That is, if fewer uninsured patients are turning up at your member hospitals because there's been a new system of health insurance offered them, why shouldn't Washington reduce reimbursements?

Mr. UMBDENSTOCK: Well, let me be a little specific here. What Peter is referring to is what we call disproportionate share payments.

SIEGEL: Mm-hmm.

Mr. UMBDENSTOCK: It's for hospitals that see a disproportionately high share of uninsured or Medicaid beneficiaries. Now, certainly, if people were to have coverage tomorrow, everybody today who's not covered, you could make the case for those dollars going away. But how soon will that coverage kick in? At what payment levels, across what proportion of the uninsured population? Even by the best estimates, right now, people are saying that it looks like some of the plans that are out there could cover maybe a third, maybe at the high end, two-thirds of the population. That still leaves a lot of people uncovered. It still leaves a lot of people on the Medicaid program, and it still leaves a lot people who are undocumented immigrants, and so on. So that need isn't going to go away over night.

SIEGEL: But let's say, of the roughly whatever it is, 45-48 million uninsured people that - let's assume success, that two-thirds of them do, indeed, become insured over a period of years. Would the hospitals, would your member hospitals accept, in principle, the idea that reimbursements from Washington should conversely decline as the number of insured patients rises at those very institutions?

Mr. UMBDENSTOCK: Yes. We have accepted that, in principle. We understand that that would be a definite improvement over the current system of so many Americans not having health insurance. But the question is: By when? At what level of coverage, across what proportion of the population?

SIEGEL: You spoke of the commitments that you did make at the White House when you talked about controlling increases in health care spending. What are those commitments? What are the hospitals going to do?

Mr. UMBDENSTOCK: Well, what we want to do is build upon the great momentum that's already out there among hospitals in terms of reducing complications and improving safety for patients, so that we're not incurring additional costs, so that we can work on really new techniques that have come out for how to avoid and prevent very costly, very dangerous infections, how we can use new tools for avoiding surgical mishaps. Now, these are spreading across the country. Unfortunately, the data lags a couple years. But we know that our hospitals are actively involved in that. If we can get more of them moving even faster than they are today, we believe we can save money.

SIEGEL: So you're saying these are improvements in the quality of hospital care…

Mr. UMBDENSTOCK: Right.

SIEGEL: …that are already underway. But they haven't already been reflected in a slower rate of increase in hospital costs, have they?

Mr. UMBDENSTOCK: Well, I'll give you an example. Michigan had a collaborative across all of their hospitals on how to eliminate what's called central line infections - infections associated with central lines that are place in patients, very dangerous situations. Now, these hospitals, working together, were able to actually get their numbers down to zero and to hold them there over a long period of time. That's never been done before. To replicate that in all of the hospitals where that technique is used is very important work. Now the question is how do we spread it and make it part of the routine at every hospital?

SIEGEL: But since we generally, I mean, assume that our hospitals are doing these things - I mean, it doesn't require the president calling people in to get the hospitals to want to reduce complications and infections, they're doing these things. If that were the case, we would've seen a steady cost of hospital care, or a decline, or at least nothing more than the normal rate of inflation.

Mr. UMBDENSTOCK: Well, it's not the only issue that's driving the cost of health care. So I think we have to look more broadly than that. But can we eliminate that source of additional spending? That's the goal.

SIEGEL: Rich Umbdenstock, president and CEO of the American Hospital Association. Thank you very much.

Mr. UMBDENSTOCK: Thank you.

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Orszag Defends Health Care Plans Amid Criticism

President Obama is pushing to overhaul the nation's health care system, but doctors, hospital officials and others are raising sharp concerns over his call for a government-run insurance plan to compete with private plans.

Peter Orszag, director of the White House's Office of Management and Budget, defends the plan, telling NPR's Michele Norris that it will put the U.S. "on a path to eliminating the number of uninsured people in the United States."

Orszag says evidence suggests that many insurance markets lack adequate competition, and the goal of the public plan is to expand choice, introduce more competition and drive down premium costs.

"Our goal here is not to force doctors and hospitals to do things that they don't want to do, but rather to create a plan that we think that they'll want to participate in, and that beneficiaries will find helpful also in terms of having more choices available," he says.

One challenge the administration faces, however, is that in areas such as Howard County, Md., which offers relatively low-cost health coverage to its residents, many don't enroll. Orszag says no one would be required to participate in a public plan, but "there are proposals that the president is open to — to have some sort of personal responsibility where you have to carry insurance just like you do when you drive a car. But you could purchase that insurance through a health exchange where the public plan would be one of many options."

Concerns From Hospitals

One aspect of the proposal that has come under fire is a proposed $200 billion cut in federal payments to hospitals. Hospital officials say that will result in cuts in services to the people who need it most.

But Orszag says that, for example, under the reimbursement system known as disproportionate share payments, government funding is provided to hospitals in large part to help meet the cost of caring for the uninsured.

"Our argument is that as the number of uninsured goes down ... the hospitals would in a sense be double-paid if the number of uninsured people declines significantly and they were still receiving payments to meet the cost of the uninsured," he says. "So we scale those back, and we would also target those payments more efficiently toward the hospitals that are disproportionately serving the remaining uninsured."

Rich Umbdenstock, president and CEO of the American Hospital Association, tells NPR's Robert Siegel that the hospitals have accepted "in principle" that reimbursements from Washington will decline as the number of insured patients rise at those institutions. But, he says, too many questions remain.

"How soon will that coverage kick in? At what payment levels? Across what proportion of the uninsured population?" he asks. "Even by the best estimates, right now, people are saying that it looks like some of the plans that are out there can cover maybe a third, maybe, at the high end, two-thirds of the population. That still leaves a lot of people uncovered. It still leaves a lot of people on the Medicaid program, and it still leaves a lot of people who are undocumented immigrants and so on. That need's not going to go away overnight."

Orszag says opposition to the health care overhaul is inevitable. "We're not going to transform a $2 trillion sector of the economy without some jostling occurring and without some objections being raised or some concerns being raised," he says. "That's natural."

And Umbdenstock says all the stakeholders in the health care system have to examine what they can do now to cut costs.

"You have to look at cuts in the context of a complete plan for reform. And our elements in reform include the important element of affordability," Umbdenstock says. "But also we have to think about coverage. We have to think about quality."

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