Reform delays - Big Health Reform Bill May be Unlikely This Year

June 24, 2009 - In my book Obama, Doctors, and Health Reform, out next week,I describe health reform as a whirling Rubik Cube with a lot of interchangeable moving parts. Two of the biggest of these moving parts are hospitals, where the bulk of Medicare money is spent, and politicians. President Obama is trying to keep the Rubik Cube moving forward, but there are signs the gears between the moving parts are beginning to clog.

The recession is hitting hospitals. Total margins are at an all time low. So is cash on hand. Fifty percent of America’s 5700 hospitals are now losing money. Many hospitals are laying off workers and cutting capacity.

This is important for timing reasons. Politicians are now getting ready for their fourth of July recess, and nothing will have been done before they go. In August comes another political recess. When the politicians return home to consult with their constituents during these recesses, they will find unrest among hospitals, often the biggest employers in town. Obama’s plans call for big Medicare cuts, as much as 30% for hospitals. Hospital CEOs are not likely to look upon these cuts kindly, and they will no doubt share their angst with their Senators and Representatives.

Add this angst to increasing anxiety among the public about the growing federal deficit, and you have a formula for gridlock. If the federal legislators don’t get some of the details worked out, such as to pay for the $1.6 trillion cost over the next ten years, health reform momentum may grind to a a halt if polls indicate a reluctance to pay for a massive overhaul, and nothing big will pass before the end of the year.