The president’s budget shows that not even he buys that argument now. It states: “To better align DSH payments with expected levels of uncompensated care, the Budget proposes to begin the reductions in 2015, instead of 2014.” That is, the president expects that the Medicaid and exchange subsidies won’t eliminate that $360 million of uncompensated care next year. And it’s not because some states are choosing not to expand Medicaid — he proposes to rescind the cuts even in states that are expanding it.
2. The PPACA won’t reduce the deficit.
Rescinding the DSH cuts demonstrates why the health‐care law’s supposed “deficit reduction” is a mirage.
Washington has a bipartisan tradition of overspending in the current year while enacting spending cuts and tax increases that will take effect in later years. Those “out‐year” measures make the ten‐year budget figures appear more responsible than they would if current‐year policies were continued. When the out‐year spending cuts and tax hikes are due to take effect, Washington rescinds them, and the cycle begins again. Congress has postponed planned cuts in Medicare physician payments every year for the past decade. This year, Obama rescinded cuts the PPACA would make to private Medicare plans, and both parties are lining up to repeal the law’s medical‐device tax and the board it would create to reduce Medicare spending.
The president’s latest DSH proposal is a classic “dessert now, spinach later” ruse. To “pay for” this $360 million increase, he proposed cutting DSH payments by that exact amount in 2015 and 2016. He even proposed an additional $3.6 billion cut — in 2023.
3. Hospitals can stop crying poverty.
Hospitals, which lobbied for the PPACA, have been threatening that unless states implement the Medicaid expansion, the Medicaid DSH cuts will lead to layoffs and closures in their districts.
President Obama has rescued the hospital lobby from that self‐inflicted wound. The hospitals can no longer use the Medicaid DSH cuts as their boogeyman, because now everyone knows the president will rescind this year’s cuts, and next year’s cuts, and …
4. States don’t need to expand Medicaid to protect hospitals.
The Washington Post reports that rescission of the DSH cuts “could make it a bit easier for states not to expand the Medicaid program. If they know the additional dollars are coming in, there’s a bit less worry about turning down the Medicaid expansion funds.” At the same time, the president has undercut expansion supporters by admitting that expanding Medicaid will not reduce uncompensated care.
The president’s budget shows that the brave state legislators who have been fighting the Medicaid expansion in states like Ohio and Florida were right all along — and it makes expansion supporters, like Governors Rick Scott (R., Fla.) and John Kasich (R., Ohio), look rather silly.
This relatively small spending item is a big admission that the president’s health‐care law simply won’t work, and it should provide encouragement to state officials who are still resisting the massive increase in deficit spending, government bureaucracy, and health‐care costs the PPACA embodies.