CMA Health Policy Blog

Beware of “Smoke and Mirrors” Savings

July 8, 2009 at 1:44 pm achiplin Leave a comment

Hospitals Reach Deal with Administration, offering $155 billion in health savings.  (Washington Post, July 7, 2009)  http://www.washingtonpost.com/wp-dyn/content/article/2009/07/06/AR2009070604053.html?hpid=topnews.

The nation should be careful of healthcare savings that are more “smoke and mirrors” than actual savings through changed medical practices and efficiencies.  As the Washington Post article points out, “most of the savings – about $100 billion – would come through lower-than-expected Medicare and Medicaid payments to hospitals” and “$40 billion would be saved by slowly reducing what hospitals get to care for the uninsured.”  These savings, roughly $140 billion, represent on-going cost-containment efforts by the Centers for Medicare & Medicaid (CMS) and have little to do with any overall industry agreement to change its ways or to delve into a serious analysis of how its operations might be streamlined toward healthcare efficiencies.  The true smoke and mirrors aspect of the hospital industry’s agreement lies in their anticipation of a higher rate structure, under the administration’s yet-to-be-announced public plan, than is currently provided through Medicare.  It is hard to see what the public gets out of this “deal.”

Entry filed under: Health Care Reform.