Policy: Budgets & Deficits

With gift to hospitals, Democrats continue to scrap Obamacare deficit-reduction

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Opinion,Timothy P. Carney,Columnists,Obamacare,Budgets and Deficits,Subsidies

You’ve heard of “buy now, pay later.” Obamacare is “buy now, defund later.”

Since Democrats haphazardly pieced together the Affordable Care Act in early 2010 (declaring proudly that the bill would reduce the deficit) the Obama administration and Congress have steadily stripped out the provisions that were supposed to pay for the law’s subsidies to high-risk patients and well-connected industries.

The recent bipartisan budget agreement continued this trend — and handed a victory to the hospital lobby — by postponing an Obamacare provision that would have reduced payments to hospitals.

Federal law requires hospitals to treat incoming patients regardless of ability to pay. This could be very costly for a hospital in a poor rural area, or in an area with a large illegal-immigrant population. So Congress provides an offset, called Disproportionate Share Hospital (DSH) payments.

Under the DSH program, Congress requires state Medicaid programs to pay the hospitals that take in the highest shares of non-payers. The federal government then partially reimburse states for this.

One way Obamacare planned to reduce the federal deficit was by trimming federal DSH payments to states. The justification: Obamacare would get more people health insurance, and so hospitals would have fewer non-payers.

The spending bill that the House and Senate recently passed, however, undoes that subsidy cut. Section 1204 of the bill restores to pre-Obamacare level the DSH subsidy for the current fiscal year and next year.

Arent Fox, a top K Street lobbying firm, published an analysis with this explanation: “With the delayed rollout of the federal exchange and lack of state participation in Medicaid expansion, the entry point for insured individuals will remain hospital emergency departments.”

Long before the disaster of was evident, though, the hospital lobby was pushing back on Obamacare’s DSH cuts. In May, Democrat Rep. John Lewis proposed the DSH Reduction Relief Act of 2013, and the American Hospital Association lobbied for that bill, according to lobbying filings.

Go back to the beginning of 2012, and you’ll see hospital chain Meridian Health lobbying Congress on DSH payments. Even back in 2010, the hospital lobby was pushing bills to curb the impact of DSH, according to AHA lobbying filings.

It’s important to remember that the AHA was one of Obamacare's fiercest supporters. AHA lobbied to pass the bill and filed briefs in federal court to defend the individual mandate. AHA’s lobbying firms include the Ricchetti Group, founded by Joe Biden’s chief of staff, Steve Ricchetti. Steve’s brother Jeff currently lobbies for the AHA on “DSH Relief.”

The budget bill’s hospital fix is just the latest in a series of special interests earning exemptions from Obamacare. More importantly for taxpayers, it’s the latest Obamacare cost-saving measure to be scrapped.

Obamacare’s first deficit reducer to hit the pyre was the CLASS Act. This was a federal insurance program for long-term care. It was supposed to slash the federal deficit by $70 billion over a decade, accounting for half of the law’s deficit-reduction. Pretty soon, government accountants realized the program would do nothing of the sort – it was a death-spiral waiting to happen, and it would cost taxpayers dearly. The Obama administration wisely paused the program, and Congress soon killed it.

Another laughable Obamacare deficit reducer was the dreaded 1099 provision. It would have imposed ugly tax reporting requirements on the smallest of small businesses (if a part-time photographer bought a used lens from another photographer, she would have to file an IRS 1099 form). Congress scrapped this one pretty quickly.

In early December, the Obama administration proposed to tweak subsidies through the complicated “risk corridor” program, to make up for new costs they were imposing on insurers through other ad hoc tweaks.

In late December, along with the hospital fix, the administration scrapped another deficit-reduction measure, suspending the individual mandate tax for a year for all the people whose health insurance plans were cancelled. (Many of those plans were cancelled thanks to Obamacare’s rules, of course.)

These supposed deficit reducers helped the White House convince budget-conscious Democrats to back the bill. They've served their purpose. Now, Democrats toss them in the trash, because, after all, we're stuck with this law.

Timothy P. Carney, The Washington Examiner's senior political columnist, can be contacted at His column appears Sunday and Wednesday on
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