The American Hospital Association last week submitted a comment letter to the Senate Finance Committee urging the Committee not to reduce hospitals’ Medicare payments to help fund health care reform. Committee Chairman Max Baucus (D-Mont.) and member Chuck Grassley (R-Iowa) had made that suggestion, among others, on May 18 in a health reform policy paper prepared prior to the Committee taking up the matter this month.

In its letter, the AHA claimed that "misguided" Medicare spending reductions would hurt hospitals that it says are already under-reimbursed by Medicare. The AHA said that hospitals are projected to have a negative 6.9% Medicare profit margin in 2009, compared to a positive 6.2% margin in 1999. The 2009 margin would be the lowest over that 10-year period.

Baucus's and Grassley's other proposals included requiring Medicare beneficiaries to pay more for coverage, changing federal tax treatment of employer-sponsored healthcare, and reducing Medicare spending in areas of the country where per-beneficiary spending exceeds the national average.