Media Statement

California Hospital Association Applauds President Obama for Continued Focus on Health Reform
Concerns Remain Over Public Plan, Medicare Payment Shifts from Larger to Smaller States

California’s community hospitals are on the frontlines of health care, day in and day out caring for all patients regardless of their ability to pay. The current economic crisis has left an estimated 48 million Americans – including 7 million Californians – uninsured.Lack of health care coverage not only affects these individuals, but other patients and the community hospitals, emergency rooms and trauma centers that care for them.

The California Hospital Association (CHA) has long supported the concept of “shared responsibility” as a cornerstone to achieving comprehensive health care reform. CHA applauds President Obama for his continued commitment to achieving meaningful health care reform by ensuring that all Americans have equitable access to affordable, medically necessary, high-quality health care.

California hospitals remain concerned with some aspects of the various health care reform proposals. Last night, the President reiterated his commitment to a public exchange plan as an option for the uninsured. Although access to affordable coverage is a worthy policy goal, hospitals have concerns about how a public plan would be structured and operated. A public plan that pays hospitals and other providers based on Medicare rates would exacerbate the current underfunding of governmentally sponsored health care programs. Medicare historically has underpaid California hospitals. California hospitals are paid only 84 percent of their costs by Medicare. In 2008, Medicare payment shortfalls to California hospitals totaled $3.58 billion. A new plan that expands these underpayments is not a good solution.

Another health care reform proposal – currently included in the House of Representatives plan – would shift Medicare payments from large states such as California to smaller states. Known as “geographic variation,” this proposal would allow the Secretary of Health and Human Services to shift Medicare payments from larger states to smaller states, without a vote by Congress. Such a shift in payments will hurt California, especially the Los Angeles area.

Although geographic variation is an area ripe for further research and clarification, the proposal to summarily decrease Medicare payment rates without Congressional action is unwise. Medicare payments to California hospitals cannot be reduced any further.

The nation has an unprecedented opportunity to build on the extraordinary momentum to reform health care. We can achieve our long-standing goals if health care stakeholders, government and individuals all commit to improving our health care financing and delivery systems.