Hospices Reveal Obamacare's Impact

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Two hospice care centers are struggling to make ends meet, and Obamacare’s cuts to Medicare are to blame.

Hospices—health care facilities for the terminally ill—along with other Medicare providers are facing Medicare pay cuts. Of the $716 billion in payment reductions, hospice care was hit by a $17 billion payment cut from 2013 to 2022.

Now, contrary to all of the misleading claims, this effect is already beginning.

San Diego Hospice recently laid off 260 workers, closed a 24-bed hospital, and has recently filed for Chapter 11 bankruptcy. San Diego Hospice’s financial condition is attributed mainly to reduced Medicare reimbursement, fewer patients, and a federal audit that hurt the center’s reputation.

Another provider, Delaware Hospice, had to lay off 52 workers, citing lower federal reimbursement as the cause. “The decision,” said CEO Susan Lloyd, “is a direct result of a consequential decline in census and the need to position the organization to meet additional changes and challenges that the hospice industry anticipates with health care reform.”

“There’s a bit of a squeeze going on,” said Theresa M. Forster, vice president for hospice policy and programs at the National Association for Home Care & Hospice. “Hospices have to do more with less, and you can see how that could take its toll over time.”

If other Part A providers (e.g., hospitals, skilled nursing facilities, home health agencies, hospices), like these hospice centers, can’t withstand Obamacare’s $700 billion worth of cuts, how will seniors be able to access these services?

Remember how AARP, the liberals in the media, and the President insisted that Obamacare’s $716 billion in cuts to Medicare were “reforms that won’t touch your guaranteed Medicare benefits. Not by a single dime”?

Heritage had explained that financing Medicare benefits and seniors’ ability to access those benefits are inseparable—you can’t cut payment to services without affecting persons who depend on those services.

Recall that both the actuary of the Centers for Medicare and Medicaid Services and the Medicare trustees projected that Obamacare’s cuts would cause 15 percent of Part A providers to become unprofitable by 2019 and (if the reimbursement rates stay at Obamacare levels) 40 percent by 2050.

This is flawed and counter-productive policy. During tonight’s State of the Union address, it will be interesting to see if the President wants to double down on this approach. There’s a better way: harnessing the forces of competition. That will require serious structural reforms—as outlined in The Heritage Foundation’s Saving the American Dream—not just tightening price controls that put Medicare providers out of business.

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