fah hospital policy blog

Perspectives on health policy affecting America’s hospitals and the patients we serve.

CBO Report Highlights Challenges Facing Hospitals if Budget Cuts Continue

September 08, 2016 | Chip Kahn

Category: Affordable Care Act, FAH News, Financing

Today’s report by the CBO on Medicare hospital payment cuts is a show-stopper and should give policymakers pause as they consider the future of hospital care for Americans.  The bottom line:  embedded Medicare cuts are taking a punishing toll on the hospitals that serve all of us. 

Even accounting for the benefits of ACA coverage expansion, too many hospitals - between 40 and 50 percent in 2025 – will suffer negative operating margins.  Rising costs of care, including costs of drugs, devices, and labor, to name just a few are far outpacing Medicare payments.  CBO’s report sheds an important, critical light on the real world operational challenges facing hospital care.

As we have said for far too long, Enough is Enough! Further Medicare payment cuts are unsustainable. 

CBO released a working paper on Thursday entitled, “Projecting Hospitals’ Profit Margins Under Several Illustrative Scenarios.” A corresponding blog was also published highlighting the analysis results.