August 14, 2018 12:01
AM
More and more
Democrats are signing onto making the government the only payer of healthcare
services, but they're about to face a considerable adversary in the hospital
industry.
Hospitals tell
the Washington Examiner that while they support “universal
coverage,” in which everyone has some way to pay for medical care, they don’t
want a state or federal government to be the only one funding it. As the debate
over what is known as "single payer" healthcare continues to take
hold, they will become a more vocal part of the opposition.
During the past year
more politicians than ever have backed the Medicare for All Act, which
would insure everyone in the U.S. through Medicare, the federal healthcare
program that covers adults 65 and older and people with disabilities.
But the idea of the
government ditching private insurers isn’t something hospitals welcome. They
say it would force painful trade-offs: Either taxes go up, or doctors and
hospitals face pay cuts, leading to closures, layoffs, and long lines for care.
“I’m disappointed any
Democrats are going off on this tangent,” said Charles Kahn III, president of
the Federation of American Hospitals, which represents investor-owned and
managed community hospitals. "They should be focusing on the advances that
were made under the Affordable Care Act.”
Hospitals are powerful
opponents in the single-payer debate because they are the largest employer in
many districts. Their lobbyists have been urging Congress to fix the Affordable
Care Act, or Obamacare, by adding more federal funding. They have also tried to
encourage more states to expand Medicaid under Obamacare to cover individuals
making $16,000 a year, something 17 states haven’t done.
The debate over
whether the U.S. should enter a single-payer system remains largely theoretical,
given that Republicans control all branches of government and are staunchly
opposed to the idea. But the Medicare for All Act from Sen. Bernie Sanders,
I-Vt., has gained the support of an unprecedented 15 Democratic senators and
123 House lawmakers. The issue is playing out in governors’ races and is
expected to be prominent during the 2020 presidential election.
Under the Sanders
proposal, Medicare coverage would become more extensive than it is now. It
would pay for emergency surgery, prescription drugs, mental health, dental, and
eye care, all without co-pays. People would be placed into Medicare whether
they are uninsured, on private plans, receiving coverage through a job, or on
Medicaid.
This shift is expected
to reduce overall healthcare spending. One study by the Mercatus
Center at George Mason University predicted the reduction would be as much as
$2 trillion from 2022 to 2031. That would come mostly through cutting payments
that hospitals and other providers were getting from private insurance by 40
percent.
Democrats lambaste
drug and insurance companies regularly for high costs, but it’s hospitals that
make up the largest share of healthcare spending, at 32 percent, according to actuaries at
the Centers for Medicare and Medicaid Services. In comparison, prescription
drugs make up 10 percent of spending while doctors make up 20 percent.
Gerard Anderson,
professor of health policy and management at the Johns Hopkins Bloomberg School
of Public Health, said hospitals would fight against proposals to make the
government the sole payer for healthcare.
“Hospitals are going
to look for their bottom line as they always have,” he said. “If they are going
to be worse off, they are going to complain and they will argue that patient
safety and patient access will decline."
The fragmentation of
the current system, whereby people in the U.S. are covered in different ways,
generally benefits hospitals. They are able to charge private insurers more to
make up for the gap left by the uninsured and government programs. Medicare
pays roughly 80 percent of what private coverage pays, while Medicaid pays
roughly 60 percent.
About 178 million
people currently have private coverage that they buy directly or get through a
job. If everyone in this group were to have Medicare instead, then the amount
hospitals' recoup for caring for those patients would be lower than what
private plans were paying.
“For hospitals it
would be devastating,” said Mary Grealy, president of the Healthcare Leadership
Council, a coalition that includes hospitals, drug companies, and insurers.
“Fiscally, it would be very difficult for hospitals to survive if the vast
majority of their patients were on Medicare.”
Proponents of allowing
the government to have a more extensive role in healthcare, and even to set
prices, point out that waste is prevalent in the current system. Patients do
receive unnecessary medical care, such as repeated tests, or surgeries that
either don’t make them healthier or even make them worse.
A senior aide for
Sanders noted that hospitals would recoup more funds for certain patients under
Medicare than they do now. Hospitals receive little to care for the 30 million
who are uninsured, and about 70 million people who have Medicaid now would receive
the higher-paying Medicare instead. Because the plan is also expected to reduce
administrative and drug costs, hospitals would see savings in that area as
well, the aide said.
"We wouldn't just
say, ‘We are cutting everyone's rates and they need to deal with it,'" the
aide said. "We would take a look at the system and see where to direct
resources. There is some room in the system to bring down healthcare costs, and
everyone is going to have to play a role in that."
Several national
hospital groups are mum about their positions on the Medicare for All Act. The
5,000-member American Hospital Association declined to be interviewed for this
story and a spokeswoman said the organization was still reviewing the
legislation. America’s Essential Hospitals, whose members care for vulnerable
communities, also doesn’t have a formal stance.
But efforts to defeat
single-payer systems at the state level, as well as past actions on similar
legislation, offer clues into hospitals’ thinking.
The American Hospital
Association and the Federation of American hospitals in 2016 came out strongly against
a national “public option,” a proposal to allow people to buy government-run
plans instead of private ones. Still, Democrats in the Senate in recent months
have been backing this plan as an add-on to Obamacare.
Hospitals tend to
spend less on lobbying than other healthcare groups, but they do team up with
insurers, patient groups, and drug companies, to kill single-payer proposals.
This happened not only in California but in Colorado, where voters
overwhelmingly defeated a single-payer ballot measure in 2016.
Hospitals defeated
another plan in California that would have allowed the state to set prices at
Medicare rates. The California Hospital Association blasted the plan as a “recipe
for disaster,” warning 175,000 jobs would be cut and $18 billion in revenues
lost.
Carmela Coyle, CEO for
the California Hospital Association, said lawmakers should focus on covering
the remaining 3 million uninsured in the state, a historic low reached under
Obamacare. About half are in the country illegally, and the other half don’t
realize they qualify for Obamacare or Medicaid, Coyle said.
“We are very much
supportive of universal coverage, but I think the challenge and the dangers of
financing an enormous healthcare system through one source puts extraordinary
pressure on that single source, whether federal or state government,” she said.
A poll from the Kaiser
Family Foundation found that 53 percent of the public favors a single-payer
system, but it isn’t clear that everyone understands that term to mean the same
thing. Public perception appears malleable on the topic: Additional polling
suggests that support falls off when people are faced with higher taxes or with
the possibility of the government having more involvement in healthcare.
“It’s easy to talk
about single payer and Medicare for all, and politically it’s attractive for
some Americans, but when you actually analyze it in terms of the kind of
patient-physician relationships that people are used to, and the hospital
services available, they wouldn’t be sustainable in that model,” Kahn said.
And higher taxes may
be on the table to have Medicare payments align more closely with those of
private insurers, a politically difficult approach. According to the Mercatus
Center analysis, the plan raises government spending by $32.6 trillion, an
estimate that is in line with an earlier study by the left-leaning Urban
Institute.
Sanders has not said
how his bill would be financed, though he has released a paper suggesting several possibilities,
including through taxes on households or employers.
Asked whether the
hospital industry was gearing up for a fight against single payer, Grealy
replied, “I would call it an educational campaign.”
“We take it
seriously,” she said. “And we recognize if we want to make the case against
single payer then we have to be honest about how we need to make improvements
in our current private-based system.”
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