We are concerned about reports of reduced access to health care services by beneficiaries. As such, the President has proposed to modify his Medicare reform plan to increase Medicare and Medicaid reimbursement for health care providers. The President remains committed to his overall plan to add a voluntary prescription drug benefit to Medicare, improve its and competitiveness and efficiency, and transfer part of the on-budget surplus to the program to help finance the retirement of the baby boom generation. Because of the improved status of the trust fund, fewer surplus dollars are needed extend the life of the Trust Fund past 2030, thus freeing up surplus for these payment improvements as well as prescription drugs. This proposal illustrates that increased funding for provider payments need not conflict with needed funds for a prescription drug benefit.
Most experts agree that hospitals financial status has deteriorated recently.
In large part, this results from private payment reductions to hospitals. Rural hospitals inpatient margins dropped by nearly twice as much as urban hospitals margins did between 1997 and 1998. Academic health centers also experienced a significant decline in total hospital margins. While data show that Medicare hospital inpatient margins remain relatively healthy, more hospitals had negative margins in 1998 than 1996. Thus, MedPAC recommends an increase in the hospital inpatient update over current law in 2001.