Hospitals Step Up War On GOP’s Cuts For Payroll Tax Package


Hospitals are reigniting a battle with House Republicans that grew bitter last month after the GOP pushed to offset its payroll tax cut package with deep cuts to hospital payments under Medicare. The undercurrents of this fight are deepening fissures between hospitals and Republicans over the passage and future of the Affordable Care Act.

The American Hospital Association, the industry’s top lobbying group, on Friday issued an action alert — provided to TPM by a source — to its roughly 40,000 members, mobilizing them against some $14 billion in cuts pushed by the House GOP to hospital bad debt payments and outpatient services to help fund a longer payroll tax cut, unemployment insurance and a two-year Medicare doc fix. A hospital source told TPM the cuts are very much in play.“These critical issues, and others, will still be on the table when Congress returns,” the AHA alert read. “Please contact your representative and senators and urge them to reject cuts to Medicare payments for hospital services as part of any final agreement to extend the SS tax holiday, UI benefits and physician fix.”

After the GOP bill was unveiled in December, AHA and other hospital advocacy groups, shocked at the magnitude of the cuts, immediately pushed back and embarked on an ad campaign casting the prospective reductions as ominous for seniors and hospital care.

“We are deeply disappointed in the plan submitted by House Republicans today that would cut more than $17 billion in payment for hospital care,” AHA president Rich Umbdenstock said at the time. “This misguided plan jeopardizes access to hospital care and will mean fewer nurses, longer waits for emergency care and less access to new treatments.”

In a rare move, Republicans publicly fired back at the industry group. A press release titled “Facts Are Stubborn Things” from by Ways & Means Chairman Dave Camp (R-MI) mocked hospital lobbyists for allegedly overstating the impact of the cuts — and, here’s where it gets interesting, bashed hospitals for supporting the deeper cuts in the Affordable Care Act.

“It’s important to add a little perspective to what the hospital industry is calling ‘major reductions’ to hospitals in H.R. 3630,” the GOP statement said, pointing out that the cuts would total 0.5 percent of 10-year Medicare spending on hospitals. “Not so long ago, the major hospital trade associations endorsed and strongly supported legislation that became law. It contained $155 billion in hospital Medicare cuts – more than 10 times the reductions in H.R. 3630.”

The bill hit a dead end in the Senate after passing the House, but the extenders were only patched for two months, and Congress is poised to restart negotiations for longer extensions — which means the same hospital offsets can easily be picked off the shelf. That’s what Republicans will push for, and that’s what hospitals will fight hard to prevent.

The lingering bitterness within the GOP over hospital support of Affordable Care Act passage is palpable, insiders say — it became somewhat embarrassing for Republicans when hospitals refuted their contention that the ACA would hinder seniors’ access to care. But that’s still not the full story. The two sides have contradictory incentives going forward: the GOP has gone all in on dismantling the law, while hospitals have a lot to lose if it isn’t properly implemented.

The backstory is that the law transitions Medicare from paying for quantity of services to paying for outcomes. It’s one of the rare provisions with quiet bipartisan agreement, and it’s unlikely to be reversed regardless of how repeal efforts pan out. This and the ACA cuts to hospitals (and to a lesser extent, other industry groups) is compensated for by the influx of new customers the expansion of coverage brings them. If that gets rolled back, hospitals in particular will experience all pain and no gain.

“They were willing to do this because of the coverage expansion, but you take away the coverage expansion, they can’t make a go at it,” Len Nichols, a health economist at George Mason University, told TPM. “I think those hospitals would be in severe financial trouble — and the only way to solve that problem would be to give them more money to repeal those [payment reforms].”

That’s why the GOP versus hospitals battle could escalate as the party advances its repeal efforts.

Composite image includes photo from Brasiliao/ Shutterstock.


Sahil Kapur is TPM's senior congressional reporter and Supreme Court correspondent. His articles have been published in the Huffington Post, The Guardian and The New Republic. Email him at and follow him on Twitter at @sahilkapur.