Hospitals could lose $800 billion from Medicare buy-in, AHA says

SUSANNAH LUTHI  March 12, 2019 04:10 PM

Hospital groups on Tuesday pushed back against mounting Democratic support for a public option, saying the policy will lower Medicare reimbursement for providers as people leave commercial plans.

In a new analysis of a universal Medicare buy-in policy, the American Hospital Association and Federation of American Hospitals on Tuesday projected hospitals would lose $800 billion over a decade through the lower Medicare reimbursements and raise premiums within the private market—disrupting the employer insurance market where the majority of people get coverage.

If the legislation— called the Medicare X proposal — from Sens. Michael Bennet (D-Colo.) and Tim Kaine (D-Va.) is adopted, more than 20 million people could shift from commercial insurance to Medicare and drive up utilization rates, the groups said.

The report comes amid a mounting push within the Democratic ranks to add a competitive public insurance alternative to the commercial market.

In light of this push, the analysis prepared by KNG Health Consulting also urges greater investment in Obamacare, including full Medicaid expansion: estimating that of the 29 million uninsured Americans, 9.1 million would gain coverage if Congress doubles down on the Affordable Care Act, compared to 5.5 million newly insured under Medicare X.

Like last year's analysis of Vermont independent Sen. Bernie Sanders' Medicare for All bill, this study found hospitals would bear the brunt of money cuts.

"Under Medicare-X Choice, spending would fall by $1.2 trillion over the 10-year period," the report stated. "The spending reductions occur among populations who previously had private coverage and are the result of lower prices under the public plan."

Tom Nickels, executive vice president of the AHA, echoed the point frequently invoked by the healthcare industry about the public option—that it's another version of Medicare for All, or single payer.

"It is not practical to disrupt coverage provided through employer-sponsored plans that already cover more than 150 million Americans. America's hospitals and health systems remain committed to working together with policymakers to help expand coverage and reduce costs for all Americans," Nickels said. "However, a 'Medicare for All' approach would impede, not advance, our shared goals."

In a statement, Bennet and Kaine said they introduced the legislation "to give families more low-cost, high-quality health care options, not to line the pockets of hospital executives."

"Our goal is to ensure that all Americans—especially those living in rural areas with few insurance options—can receive the care they need. It shows completely misplaced priorities for these groups to attack our commonsense proposal to expand health care at a time when President Trump has proposed slashing health care programs that are critical to their patients," the senators said.

A Senate aide also emphasized that the legislation is targeted to people who live where the individual market exchanges have failed or don't attract sufficient competition—and noted that those regions are largely rural or places where "hospital consolidation has left consumers with no choices and exorbitant costs."

The staffer pushed back against the study's comparison of Medicare X with the ACA as originally envisioned, with all the states expanding Medicaid as not a fair characterization.

Industry is ratcheting up its comparison of the public option to single payer. This message is part of the strategy by a broad industry coalition, Partnership for America's Health Care Future, tasked with beating back Medicare for All. The group represents hospitals, insurers and manufacturers, and frames the various buy-in proposals as a "one-size-fits-all" solution that would shake up the landscape.

Meanwhile congressional Democrats also have conflicting views of the public option. Some see it as a transition to single payer, while others view it as a stand-alone policy that can help increase coverage.

The progressive wing that is driving Medicare for All sees pitfalls in bringing a public option to market, and wants to go straight to single payer.

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