At the primary Democratic presidential major debate, former Rep. John Delaney (Md.) outlined his opposition to “Medicare for All” and targeted on one potential loser: hospitals. [khn_slabs slabs=”966953″ view=”inline” /]
At the primary Democratic presidential major debate, former Rep. John Delaney (Md.) outlined his opposition to “Medicare for All” and targeted on one potential loser: hospitals.[partner-box]
“If you go to every hospital in this country and you ask them one question, which is, ‘How would it have been for you last year if every one of your bills were paid at the Medicare rate?’ Every single hospital administrator said they would close,” he mentioned.
This is a variation on a typical trade speaking level. Hospitals say that Medicare for All would imply critical income cuts for them. In flip, they argue, it might drive many to shut.
Still, Delaney’s declare — which received a good bit of traction on-line and in post-debate information protection — piqued our curiosity. Would “every single” hospital shut? Has somebody truly requested “every hospital in the country”?
We determined to dig in.
Delaney’s employees informed us his speaking level got here from three sources. First: the very fact Medicare pays hospitals on common 87 cents for every dollar of prices. Second: a federal report suggesting that “more than two-thirds of hospitals are losing money on Medicare inpatient services.” Third: Delaney, his employees mentioned, “has been asking this question at the rural hospitals he has visited over the course of the campaign.”
Experts we spoke with supplied a unique take — primarily, that his proof shouldn’t be sturdy sufficient to assist his declare. In addition, they informed us that the potential impression of Medicare for All on hospitals can be far more nuanced — it’s not in any respect clear that “every single hospital” would shut, and whereas some would do worse, some would possibly do higher.
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Different Hospitals, Different Effects
“It really depends on which hospitals you’re talking about,” mentioned Gerard Anderson, a well being coverage professor at Johns Hopkins University and an knowledgeable in hospital pricing.
Hospitals that deal with numerous uninsured sufferers — individuals who arguably would acquire protection beneath a Medicare for All method — would most likely enhance their income beneath the brand new system as a result of they might not face the monetary strain of uncompensated care. But hospitals that deal with many privately insured sufferers, for whom insurance coverage charges are sometimes negotiated in a good method, would see their revenues decline.
Economists are fast to level out that the latter state of affairs isn’t essentially unhealthy. American well being care spending is notoriously higher than that of different developed nations. Research suggests that hospitals, notably these with a lot of affect or market energy, are among the many key drivers of those excessive prices as a result of they can negotiate a lot larger charges with insurers.
That mentioned — would these hospitals that took a monetary hit beneath a Medicare for All method shut instantly?
Again, it’s onerous to say. But such a dramatic flip isn’t seemingly, hospital researchers mentioned.
For one factor, many hospitals that depend on personal insurance coverage might reduce elsewhere first, famous Robert Berenson, a well being coverage analyst on the Urban Institute.
“They have high staffing ratios, generous salaries, engage in capital expansion and have billions in reserves from ‘retained earnings,’” Berenson argued. “The reserves alone would forestall bankruptcy for some time.”
Additionally, beneath the brand new system, hospitals wouldn’t be working in a vacuum. Costs and incentives throughout the complete well being trade would change, too.
Then, what about these rural hospitals Delaney’s employees talked about?
To ensure, these hospitals have lately confronted critical monetary difficulties. Across the nation, more than 100 have closed since 2010, in accordance with information from the University of North Carolina’s Cecil G. Sheps Center for Health Services Research. (Indeed, one of many few coverage fixes that has alleviated a number of the monetary pressure is health insurance expansion by way of the Affordable Care Act.)
“We’re so focused right now on keeping rural hospitals open and dealing with declining life expectancy, that we haven’t engaged” with Medicare for All debates, mentioned Alan Morgan, chief government officer of the National Rural Health Association.
But analyzing the impression is difficult. On one hand, Morgan mentioned, rural hospitals typically function on tighter budgets — and decrease authorities funds with out personal money might exacerbate the problem. But on the opposite, rising unhealthy debt amongst rural hospitals, which regularly deal with excessive ranges of uninsured sufferers, means protection expansions might be welcome, particularly if Congress paid rural hospitals at a separate, enhanced charge.
“We’re not at a point where there’s detail yet to know,” Morgan mentioned.
But even beneath Medicare for All, Anderson famous, particular authorities packages and designations particularly designed to maintain rural hospitals afloat would kick in. Although some could function on restricted revenues at present, he mentioned, these packages would live on for those who qualify.
And every hospital has a singular monetary scenario, mentioned Linda Blumberg, a well being coverage fellow on the Urban Institute. So, she mentioned, imagining how rural hospitals as a complete could fare requires complicated modeling, evaluation and prediction.
“The variation here can’t be understated. It’s tremendous,” she mentioned.
Medicare Vs. Medicare For All
Delaney’s declare additionally misses one other level. The Medicare for All invoice sponsored by fellow Democratic candidate Sen. Bernie Sanders (I-Vt.) doesn’t truly say hospitals can be paid at Medicare charges.
It’s solely potential — and certainly seemingly — that hospitals with giant personal income margins would make much less cash beneath a single-payer system. But, once more, Delaney appears to oversimplify the scenario.
The present Medicare for All invoice in Congress delegates to the federal authorities the duty of establishing a fee schedule for hospitals and docs.
Politically, Anderson argued, the percentages are “quite low” that the federal government would resolve to pay all hospitals the present Medicare charges for all providers, although it might set a cheaper price than what many personal plans now pay.
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How does this work in follow? There’s one instance in Delaney’s personal yard: Maryland has what’s referred to as “all-payer rate setting,” during which the state units what hospitals can cost for sure providers. Maryland’s method, which was first carried out in 1977 and continues to be modified, has in the end helped restrict spending progress for particular person hospital admissions.
And, notably, this worth setting hasn’t been a demise blow to the state’s hospitals.
Still, A Major (And Consequential) Change
Analysts famous that Delaney is getting at one thing actual, and essential. Medicare for All would signify a seismic change for hospitals. Figuring out the best way to pay them can be sophisticated and should be accomplished fastidiously.
“It is not an easy — it’s not a wave of the hand to fix this,” Blumberg mentioned.
After all, any authorities single-payer plan would seemingly pay lower than personal plans do. And, economists argue, it ought to, if policymakers are critical about bringing down well being care prices. But meaning switching over would require a “long transition period” to stop main disruption to how hospitals operate, and the way individuals get care, Berenson mentioned.
“Many hospitals are overpaid — substantially — but they need time and a structured approach to get down to Medicare or Medicare +10% rates,” Berenson mentioned.
Our Ruling
Delaney mentioned that “if you go to every hospital in this country and you ask them one question, which is, ‘How would it have been for you last year if every one of your bills were paid at the Medicare rate?’ Every single hospital administrator said they would close.”
But Delaney has not gone “to every hospital in the country,” so he can’t say what “every single hospital administrator” would declare. No researcher has accomplished this.
The proof for his declare can also be missing. Medicare does pay lower than personal plans, however it’s not in any respect clear that beneath Medicare for All each hospital can be paid the Medicare charge. It can also be not clear that hospitals can be affected the identical manner. Some would possibly shut their doorways, however some would possibly see their margins enhance.
This assertion shouldn’t be correct and lacks proof to assist it. We charge it False.
This story will be republished totally free (details).
“If you go to every hospital in this country and you ask them one question, which is, ‘How would it have been for you last year if every one of your bills were paid at the Medicare rate?’ Every single hospital administrator said they would close,” he mentioned.
This is a variation on a typical trade speaking level. Hospitals say that Medicare for All would imply critical income cuts for them. In flip, they argue, it might drive many to shut.
Still, Delaney’s declare — which received a good bit of traction on-line and in post-debate information protection — piqued our curiosity. Would “every single” hospital shut? Has somebody truly requested “every hospital in the country”?
We determined to dig in.
Delaney’s employees informed us his speaking level got here from three sources. First: the very fact Medicare pays hospitals on common 87 cents for every dollar of prices. Second: a federal report suggesting that “more than two-thirds of hospitals are losing money on Medicare inpatient services.” Third: Delaney, his employees mentioned, “has been asking this question at the rural hospitals he has visited over the course of the campaign.”
Experts we spoke with supplied a unique take — primarily, that his proof shouldn’t be sturdy sufficient to assist his declare. In addition, they informed us that the potential impression of Medicare for All on hospitals can be far more nuanced — it’s not in any respect clear that “every single hospital” would shut, and whereas some would do worse, some would possibly do higher.
Different Hospitals, Different Effects
“It really depends on which hospitals you’re talking about,” mentioned Gerard Anderson, a well being coverage professor at Johns Hopkins University and an knowledgeable in hospital pricing.
Hospitals that deal with numerous uninsured sufferers — individuals who arguably would acquire protection beneath a Medicare for All method — would most likely enhance their income beneath the brand new system as a result of they might not face the monetary strain of uncompensated care. But hospitals that deal with many privately insured sufferers, for whom insurance coverage charges are sometimes negotiated in a good method, would see their revenues decline.
Economists are fast to level out that the latter state of affairs isn’t essentially unhealthy. American well being care spending is notoriously higher than that of different developed nations. Research suggests that hospitals, notably these with a lot of affect or market energy, are among the many key drivers of those excessive prices as a result of they can negotiate a lot larger charges with insurers.
That mentioned — would these hospitals that took a monetary hit beneath a Medicare for All method shut instantly?
Again, it’s onerous to say. But such a dramatic flip isn’t seemingly, hospital researchers mentioned.
For one factor, many hospitals that depend on personal insurance coverage might reduce elsewhere first, famous Robert Berenson, a well being coverage analyst on the Urban Institute.
“They have high staffing ratios, generous salaries, engage in capital expansion and have billions in reserves from ‘retained earnings,’” Berenson argued. “The reserves alone would forestall bankruptcy for some time.”
Additionally, beneath the brand new system, hospitals wouldn’t be working in a vacuum. Costs and incentives throughout the complete well being trade would change, too.
Then, what about these rural hospitals Delaney’s employees talked about?
To ensure, these hospitals have lately confronted critical monetary difficulties. Across the nation, more than 100 have closed since 2010, in accordance with information from the University of North Carolina’s Cecil G. Sheps Center for Health Services Research. (Indeed, one of many few coverage fixes that has alleviated a number of the monetary pressure is health insurance expansion by way of the Affordable Care Act.)
“We’re so focused right now on keeping rural hospitals open and dealing with declining life expectancy, that we haven’t engaged” with Medicare for All debates, mentioned Alan Morgan, chief government officer of the National Rural Health Association.
But analyzing the impression is difficult. On one hand, Morgan mentioned, rural hospitals typically function on tighter budgets — and decrease authorities funds with out personal money might exacerbate the problem. But on the opposite, rising unhealthy debt amongst rural hospitals, which regularly deal with excessive ranges of uninsured sufferers, means protection expansions might be welcome, particularly if Congress paid rural hospitals at a separate, enhanced charge.
“We’re not at a point where there’s detail yet to know,” Morgan mentioned.
But even beneath Medicare for All, Anderson famous, particular authorities packages and designations particularly designed to maintain rural hospitals afloat would kick in. Although some could function on restricted revenues at present, he mentioned, these packages would live on for those who qualify.
And every hospital has a singular monetary scenario, mentioned Linda Blumberg, a well being coverage fellow on the Urban Institute. So, she mentioned, imagining how rural hospitals as a complete could fare requires complicated modeling, evaluation and prediction.
“The variation here can’t be understated. It’s tremendous,” she mentioned.
Medicare Vs. Medicare For All
Delaney’s declare additionally misses one other level. The Medicare for All invoice sponsored by fellow Democratic candidate Sen. Bernie Sanders (I-Vt.) doesn’t truly say hospitals can be paid at Medicare charges.
It’s solely potential — and certainly seemingly — that hospitals with giant personal income margins would make much less cash beneath a single-payer system. But, once more, Delaney appears to oversimplify the scenario.
The present Medicare for All invoice in Congress delegates to the federal authorities the duty of establishing a fee schedule for hospitals and docs.
Politically, Anderson argued, the percentages are “quite low” that the federal government would resolve to pay all hospitals the present Medicare charges for all providers, although it might set a cheaper price than what many personal plans now pay.
How does this work in follow? There’s one instance in Delaney’s personal yard: Maryland has what’s referred to as “all-payer rate setting,” during which the state units what hospitals can cost for sure providers. Maryland’s method, which was first carried out in 1977 and continues to be modified, has in the end helped restrict spending progress for particular person hospital admissions.
And, notably, this worth setting hasn’t been a demise blow to the state’s hospitals.
Still, A Major (And Consequential) Change
Analysts famous that Delaney is getting at one thing actual, and essential. Medicare for All would signify a seismic change for hospitals. Figuring out the best way to pay them can be sophisticated and should be accomplished fastidiously.
“It is not an easy — it’s not a wave of the hand to fix this,” Blumberg mentioned.
After all, any authorities single-payer plan would seemingly pay lower than personal plans do. And, economists argue, it ought to, if policymakers are critical about bringing down well being care prices. But meaning switching over would require a “long transition period” to stop main disruption to how hospitals operate, and the way individuals get care, Berenson mentioned.
“Many hospitals are overpaid — substantially — but they need time and a structured approach to get down to Medicare or Medicare +10% rates,” Berenson mentioned.
Our Ruling
Delaney mentioned that “if you go to every hospital in this country and you ask them one question, which is, ‘How would it have been for you last year if every one of your bills were paid at the Medicare rate?’ Every single hospital administrator said they would close.”
But Delaney has not gone “to every hospital in the country,” so he can’t say what “every single hospital administrator” would declare. No researcher has accomplished this.
The proof for his declare can also be missing. Medicare does pay lower than personal plans, however it’s not in any respect clear that beneath Medicare for All each hospital can be paid the Medicare charge. It can also be not clear that hospitals can be affected the identical manner. Some would possibly shut their doorways, however some would possibly see their margins enhance.
This assertion shouldn’t be correct and lacks proof to assist it. We charge it False.