11.5.19 / Updates

Government-Controlled Health Insurance Systems Put Americans’ Access And Quality Of Care At Risk

WASHINGTON – Not only would American families face unaffordable new costs under proposed new government-controlled health insurance systems, but independent studies and analysts warn that patients’ access and quality of care could also deteriorate.  As Ronald Brownstein explains in The Atlantic

… But [Linda Blumberg of the Urban Institute] saidthat reimbursement-rate cuts as big as Warren is envisioning would be extremely politically difficult to pass through Congress—and could lead to hospital closures or service cutbacks if they do … Len Nichols, a health economist at George Mason, also worries that cuts to providers as large as the ones Warren envisions would seriously disrupt the system …  he says such cuts would inevitably force a substantial number of less efficient hospitals, particularly those in small-town and rural markets, to close or transition into outpatient-care centers. “The disruption we are talking about here would be severe,” he told me …like Nichols, [Larry Levitt of the Kaiser Family Foundation] predicted that even with reform, such a constraint on revenues would likely increase the number of hospitals that shut down.  And as in the Urban Institute study, he believes that the new system could create greater delays in access to care: More people will be seeking coverage, while the lower reimbursement rates may lead to less investment by hospitals and fewer people seeking careers in medicine.

As The New York Times reported, experts are sounding alarm bells about the “violent upheaval” a Medicare for All system would cause hospitals: “Some hospitals, especially struggling rural centers, would close virtually overnight, according to policy experts.  Others, they say, would try to offset the steep cuts by laying off hundreds of thousands of workers and abandoning lower-paying services like mental health.”

And as The Washington Post reports, “providers warn [Medicare for all] could significantly hurt their ability to provide adequate, widespread care.  A recent report from the Congressional Budget Office [(CBO)] reinforces this concern: ‘Such a reduction in provider payment rates would probably reduce the amount of care supplied and could also reduce the quality of care.’”

And, as headlines and studies warn, the risks to patients and hospitals under so-called “moderate” fallbacks to Medicare for All – like the public option – are similar, especially in rural America:

  • The Gazette (Cedar Rapids): “Iowa’s rural hospitals could experience a loss of more than $476 million dollars under a public health insurance proposal, putting dozens at high risk for closure, according to an analysis … the analysis said those hospitals could be confronted with an even bigger detriment if a public option is implemented using Medicare reimbursement rates … If a public option plan would go into effect, the study found that between 25 and 52 of Iowa’s 90 rural hospitals would be at high financial risk for closure due to a loss of millions in revenue.”
  • Las Vegas Review-Journal: “[H]ospitals lose money on Medicare patients … But if more people were on Medicare, those losses could be unsustainable.  An industry group estimates that more than 50 percent of rural hospitals would face a high risk of closure if a public option were in place.”
  • Virginia Public Radio“[A]s many as 10 rural hospitals in Virginia could close if the federal government starts offering a public option health plan – the kind of public option that’s now being talked about on the campaign trail by former Vice President Joe Biden and others.”

The study, conducted by Navigant for the Partnership for America’s Health Care Future, finds that the public option could put more than 1,000 rural U.S. hospitals in 46 states “at high risk of closure.”  These hospitals serve more than 60 million Americans, and as Kaiser Health News and NPR report, hospital closures can have “profound social, emotional and medical consequences,” while RevCycleIntelligence also reports“[p]atient access to care suffers when a rural hospital closes its doors for good, and consequently, patient outcomes can deteriorate.”

A previous study found that “[f]or hospitals, the introduction of a public plan that reimburses providers using Medicare rates would compound financial stresses they are already facing, potentially impacting access to care and provider quality.”  Yet another study found that government insurance systems such as “buy-in” or “public option” could force hospitals to limit the care they provide, produce significant “layoffs” and “potentially force the closure of essential hospitals.”

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