Media Statement

California Hospitals Urge President Obama, Congress to Protect Access to Care in Addressing Soaring Deficit
CHA opposes efforts to restrict provider taxes, transition Medicaid to block grants

California’s community hospitals understand the growing concern among elected leaders about our nation’s fiscal health. The economy is still struggling and the federal budget deficit is soaring.

The California Hospital Association (CHA) is concerned, however, about some of the proposals announced in recent days — by members of both political parties — to rein in the costs of health care. There is no question that health care costs are rising, and that steps need to be taken by all stakeholders to address this problem. Hospitals across the country have already agreed to absorb $155 billion in Medicare payment cuts over 10 years as part of federal health care reform. In California, that translates to cutbacks totaling $17 billion by 2020. This is on top of the $3.7 billion Medicare payment shortfall that California hospitals had in 2010.

President Obama has now proposed an additional $480 billion in cuts to the Medicare and Medicaid programs as part of his plan to address the federal deficit. Among the proposals is a recommendation to restrict the use of “provider taxes,” which are used by most states to help finance their Medicaid programs. California recently implemented a successful hospital provider tax that resulted in $2.6 billion in new Medi-Cal (Medicaid) funding. Given that Medi-Cal pays hospitals significantly less than the cost of providing care, this supplemental funding has been vital to many of our state’s safety-net hospitals. CHA opposes any effort to eliminate or reduce the use of provider taxes.

CHA also is concerned about formula-driven, arbitrary budget targets that could result in across-the-board spending cuts to health care. And, a proposal by Republican leaders to turn Medicaid into a block-grant program also is troubling since this approach could cost California as much as $78 billion over the next 10 years.

Hospitals remain committed to the fundamental goal of health care reform — that of expanded health care coverage. Efforts to erode coverage expansions as part of a debt-reduction plan are short-sighted and detrimental to all Americans.

California’s hospitals are committed to doing their share to address our country’s fiscal situation. Other stakeholders also must do their part so that access to care is preserved for all patients.