Hospitals fear they'll bear brunt of Medicare cuts

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WASHINGTON -- As President Barack Obama and Congress try to thrash out a budget deal, the question is not whether they'll squeeze money from Medicare, but how much, and who will bear the brunt of cuts.

Republicans say some savings should come from beneficiaries, and they are pushing proposals such as raising the eligibility age or increasing premiums for those with high incomes, who already pay more than the standard premium. Even Mr. Obama has proposed higher premiums, increasing the likelihood that the idea could be adopted. But any significant tinkering with older Americans' benefits comes with significant political risks, and most Democrats strenuously oppose raising the age when Medicare coverage begins.

With growing pressure to reach a deficit reduction pact by year's end, consensus is building around the idea that the largest Medicare savings should come from hospitals and other institutional care providers.

"Hospitals will be in the cross hairs for more cuts," said Lisa Goldstein, an analyst with Moody's Investors Service, which follows nonprofit hospitals that issue bonds. While hospital executives fiercely defend payments their own institutions receive, many acknowledge that Medicare is spending too much and growing too fast. But those executives point out that they have already agreed to $155 billion in cuts over a decade as part of the Affordable Care Act, and they face billions more in additional cuts as part of the current negotiations. They argue that such large cuts to hospitals will ultimately affect beneficiaries.

"There is no such thing as a cut to a provider that isn't a cut to a beneficiary," said Steven M. Safyer, chief executive of Montefiore Medical Center, a New York nonprofit hospital system.

Mr. Obama and House Speaker John Boehner continued trying Tuesday to reach an overall budget accord, which would call for significant savings in Medicare and avert a deep cut in Medicare payments to doctors, scheduled to occur next month. Mr. Boehner, R-Ohio, said an increase in the Medicare eligibility age, favored by many Republicans, could wait until next year.

"I don't believe it's an issue that has to be dealt with between now and the end of the year," he said Tuesday when asked about a possible change in the Medicare eligibility age. "It is an issue, I think, if Congress were to do entitlement reform next year and tax reform, as we envision; if there is an agreement, that issue will certainly be open to debate in that context."

The starting point for the current negotiations is Mr. Obama's most recent budget request, which proposed legislation to save $300 billion, or 4 percent of projected Medicare spending, over 10 years. Republicans seek savings of $400 billion to $600 billion, and say at least some should come from beneficiaries.

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