How Debt Ceiling Shenanigans Could Damage Healthcare

Cheryl Clark, for HealthLeaders Media , August 11, 2011

Federal and federal and state governments, according to a recent report from the Government Accountability Office , are much more aggressive about limiting the ability of the commercial insurance market to raise premiums, enacting laws that require prior review and approval. Federal funds are being made available to states to beef up their oversight to reject premium hikes.

That in turn reduces the ability of hospitals to cost-shift to the commercial insurance market, to offset reimbursement decreases from government payers.


Van Gorder didn't mention the cost-shifting strategies that may be imposed, but they are likely to include:

  • Reducing certain Medicare or Medicaid covered services
  • Raising eligibility criteria or age or adding more pay for performance incentives, all of which may mean greater pressure on hospitals
  • Increasing the burden of charity care, if eligibility thresholds are raised more people will need care

The confluence of unknown monsters in the water could have the impact on the number of people hospitals can employ, Van Gorder says. Hospitals are already beginning to lay off workers to cut costs.

"Since more than 50% of a hospital or health systems cost is in labor, people will be impacted.  At Scripps, we have a plan to deal with that ,as one of our corporate goals is to create a secure workplace for our dedicated employees but I suspect in many other healthcare organizations, employees will be impacted, as will patients.  Of course that's a shame when we should be trying to create jobs as a country right now."

I've heard healthcare leaders talk about perfect storms before, about financial threats to the safety of their journey, "no money, no mission." But all this summertime political sound and fury is starting to look seriously scary for healthcare providers – and don't forget their patients – who could all be stranded in the end.

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