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The American Hospital Association in a statement Monday suggested that a White House health-care cost-cutting proposal could "severely jeopardize hospitals' ability to care for their patients and communities."

The group, which represents nearly 5,000 for-profit and non-profit hospitals, responded to a proposal by President Barack Obama issued last Saturday that would result in $106 billion in reduced payments by the federal government to hospitals for the care of low-income patients.

The White House proposal states that "as health reform phases in, the number of uninsured will go down, and we would be able to reduce payments to hospitals for treating those previously uncovered."

Coupled with another proposal to base Medicare payment more on "productivity, as well as other proposed cost savings from the president's fiscal 2010 budget plan, the AHA estimates that hospitals would see $220 billion in total cuts from their projected payments over 10 years.

"We are deeply disappointed and concerned to see the Administration propose cuts of more than $220 billion to hospitals, especially during these tough economic times when more patients are turning to their local hospital for care," AHA President and Chief Executive Rich Umbdenstock said in a statement.

The Obama administration has highlighted roughly $950 billion in possible cost savings in the U.S. health-care sector, which it says will help pay for plans to extend health insurance to those currently lacking coverage.

The centerpiece of the hospital cost-savings proposal is a reduction in payments by Medicare and Medicaid to hospitals which accept a "disproportionate" share of low-income patients. The White House seeks to reduce the payments by 75% from 2013 to 2019.

Umbdenstock, in his statement, urged Congress not to cut the disproportionate share payments until "coverage expansions are universal and fully implemented as part of reform and Medicare and Medicaid shortfalls are addressed."

The main publicly traded hospital companies include Tenet Healthcare Corp. (THC), Health Management Associates Inc. (HMA), LifePoint Hospitals Inc. (LPNT), Universal Health Services Inc. (UHS) and Community Health Systems Inc. (CYH).

-By Patrick Yoest, Dow Jones Newswires; 202-862-3554; patrick.yoest@dowjones.com