Eakinomics: MAPS – The Road to Nowhere

Eakinomics: MAPS – The Road to Nowhere No, MAPS is not a new GPS app. MAPS is the Maryland All-Payer System, and in the season of single-payer it has become a new darling among the Medicare for All (M4A) crowd. As I lay out in new research, under MAPS Maryland requires all insurers, both public and private, to pay the same administratively established rate for any service provided at a hospital. This policy stands in sharp contrast to most states, where hospitals negotiate with third-party payers to determine the rates that private insurers will pay for each service. Public payers, e.g. Medicare and Medicaid, pay hospitals government-set rates that are on average 13 percent below the cost of treating patients. To cover the shortfall from Medicare and Medicaid, hospitals must negotiate higher payments from private insurers. For example, the Congressional Budget Office found that private insurers reimburse at rates 89 percent greater than Medicare, on average, while the RAND Corporation found plans reimbursing at 241 percent of Medicare rates in 2017. This discrepancy is a big problem for M4A, which relies on Medicare reimbursement rates. Rates that low mean the hospitals will be bleeding red ink, quality of care will be diminished, and some people will not get access at all. Enter MAPS, which supporters argue provides equitable access to care and brings down system-wide costs. Unfortunately, the facts don’t support the case. The only way the MAPS program survived from 1991 to 2017 (the most recent year for which we have data) is that Maryland negotiated a waiver that allows it to pay more than the usual Medicare reimbursement rates – about $20 billion more. That’s a lot of money. If MAPS were expanded to every other state, it would have cost taxpayers an extra $77 billion in Medicare spending in 2016. That’s not a health policy success. That’s one state living large by picking the pockets of the rest of the states. Worse, this “investment” in Maryland health policy didn’t address the most important issue right now: the cost of care. Despite promises to the contrary, as of 2014, the per capita costs of personal health care in Maryland were $8,602—which ranked 33rd among states. MAPS isn’t a model for anything. It’s a cushy deal Maryland struck three decades ago to pay for its price-fixing habit. It is certainly not a path to the future of U.S. health policy.