Jim Alexander
Technical Director, HFMA
The President signed Senate Bill 1932, the Deficit Reduction Act of 2005 (DRA), February 8. The DRA will bring reductions in direct Federal spending of about $39 billion over the 2006-2010 period and approximately $99 billion from 2006-2015. The impact on Medicare is roughly $6 billion for 2006-2010 and $22 billion over the 10-year stretch, while Medicaid is cut approximately $5 and $26 billion for the respective time periods.
But, counted with Medicare’s numbers is Medicare DSH savings due to “clarification” of what can be counted as Medicaid services. The Congressional Budget Office says the Medicare savings on DSH are $1.2 billion for 2006-2010, $3 billion for 2006-2015. Add this to the spending reductions of Medicaid’s that may come to rest in large part on hospitals through “cost sharing,” benefit changes, and constraints on states’ Medicaid funding (read by hospital folk as more bad debt or charity) and the numbers hospitals should be concerned with are getting into the neighborhood of $4 billion for 2006-2010 and $16 billion for the longer haul, 2006-2015 attributable to Medicaid changes and the Medicare DSH reduction.
Hospitals part of the safety net, dependent on Medicaid, may find this justifies a close look at this legislation and factoring some more financial constraint into the budgets.
Click here to download the 181-page bill.
Read the HFMA News story about the DRA.
