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Wednesday, January 16th 2002

President George W. Bush
The White House
1600 Pennsylvania Avenue, NW
Washington, DC 20500

Dear President Bush:

On behalf of the approximately 5,000 hospitals our organizations represent, the thousands of communities they serve, and the millions of patients for whom they provide care, we urge you to maintain your commitment to high quality, accessible health care by fully funding Medicare and Medicaid in your FY 2003 budget blueprint.

At a time when many hospitals are already struggling to meet increased demands for their services, they also face serious challenges, including widespread health care worker shortages, soaring drug and technology costs, stifling regulatory burdens, and the need to enhance their disaster readiness efforts. Reductions in Medicare and Medicaid would be devastating. At the same time, further damage would be done if reductions currently in the law and scheduled to go into effect in FY 2003 are not repealed - such as Medicaid "disproportionate share" payments to hospitals that care for large numbers of Medicaid and uninsured patients; Medicare "indirect medical education" funding for hospitals that not only bear the expense of teaching future generations of caregivers, but also of treating the uninsured; and a scheduled 15 percent reduction in home health funding that is slated for this October. Hospitals also struggle with serious payment shortfalls under Medicaid, and many states are now cutting back on Medicaid reimbursement. In addition, at the end of 2003 critical provisions many hospitals depend on to buffer the dramatic losses brought on by implementation of the Medicare outpatient prospective payment system in 2000 will be lost.

More than a third of all hospitals already lose money on Medicare, and another third barely break even. Such funding shortfalls threaten to jeopardize the health care services that America's seniors need and deserve, and further cuts would exacerbate an already tenuous situation. Indeed, we strongly believe we must not only protect the system from further cuts, but also shore up those parts of Medicare that have been historically weak. This includes making improvements to the rural area wage index and standardized rate, and providing a full market basket update for inpatient services.

The 2000 Republican Platform includes this statement: "For Medicare to survive - and more important, to succeed - it must become a common enterprise of government, health professionals, and hospitals alike. Rather than continue the practice of recurrent and unpredictable cuts in provider payments, a reformed Medicare program will allow health care providers, particularly those helping rural and underserved populations, to adapt to changing conditions in health care by providing reimbursement at levels that will permit health care providers to continue to care for these patients."

We wholeheartedly agree with this statement. And we urge you to reject any reductions in the Medicare and Medicaid programs, and restore funding to vital programs that are scheduled to experience further cuts in 2003, while preparing your budget blueprint for next year.

Thank you for your thoughtful consideration.


American Hospital Association
Association of American Medical Colleges
Catholic Health Association of the United States
National Association of Children's Hospitals
National Association of Public Hospitals and Health Systems
VHA Inc.


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