June 12, 2019 | Updates

FLASHBACK: Study Shows Government Insurance System Would ‘Jeopardize Patients’ Access To Care … Destabilize Insurance Markets’

WASHINGTON – As the U.S. House Committee on Ways and Means holds a hearing today that will address Medicare for all and other proposed government insurance systems, such as so-called “public option” and “Medicare buy-in” schemes, lawmakers should remember that a study released just three months ago revealed that such an approach would “not only contribute to massive budget cuts to hospitals nationwide but would also jeopardize patients’ access to care … [and] would destabilize insurance markets and compound hospital expenses.”

As Modern Healthcare reported in March, the study – prepared by KNG Consulting for the Federation of American Hospitals (FAH) and the American Hospital Association (AHA) – projects that a buy-in system would “raise premiums within the private market—disrupting the employer insurance market where the majority of people get coverage … [M]ore than 20 million people could shift from commercial insurance to Medicare and drive up utilization rates,” while “hospitals would lose $800 billion over a decade through the lower Medicare reimbursements,” threatening Americans’ access to the care they need.

Another study, released in March by Navigant Consulting, concludes that a government insurance system could force hospitals to limit the care they provide, drive significant “layoffs” and “potentially force the closure of essential hospitals.”  As POLITICO notes, “hospitals already are facing financial challenges given the aging population and the increasing share of Medicare patients,” and Medicare for all-style proposals “‘would potentially accelerate those headwinds significantly,’ said Navigant’s Jeff Leibach.”

And when it comes to government-run insurance systems on the state level, these same concerns are “supported by a Milliman analysis commissioned by the Association of Washington Healthcare Plans,” Modern Healthcare reports.  As the Association’s executive director recently warned, under such a system, “[t]here’s a market shift.  The individual market grows exponentially, the small-group market collapses. The estimate Milliman gave us in the worst-case scenario is that 60 percent of the market would migrate to the individual market.  At that point, the 40 percent that remains goes into what, in the insurance world, is called a ‘death spiral.’  The risk pool starts to shrink in a way that makes it impossible to insure it effectively.”  The Milliman study also found that “lower-income consumers who receive ACA premium subsidies would not see cost savings.  Instead, the main beneficiaries of the new plans would be consumers who earn more than 400% of the federal poverty level, who make up about 17% of the 410,000 uninsured people in Washington.”

  • To read the full KNG study on the impacts of a national government insurance system, CLICK HERE.



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