Would Medicare-for-all actually crush hospitals, as its opponents argue? It probably depends on where they’re located.
The fate of hospitals in the United States — particularly in rural areas, where they’re closing in droves — has become a top point of contention in the political debate around Medicare-for-all. Depending on who you listen to, hospitals are either full of waste, bloat and profit-seeking — or stretched so thin that their ability to stay open is jeopardized.
The dual positions surfaced in last week’s Democratic presidential primary debate, in a series of exchanges between Medicare-for-all author Sen. Bernie Sanders (I-Vt.) and former congressman John Delaney (D-Md.). Delaney charged that paying hospitals lower Medicare rates would force them to shutter. Sanders shot back that his simpler, more streamlined system would save them hundreds of billions of dollars in administrative costs.
“Hospitals will be better off than they are today,” Sanders said.
“Listen, his math is wrong,” Delaney responded. “… It's been well-documented that if all the bills were paid at Medicare rates … then many hospitals in this country would close.”
“I've been going around rural America, and I ask rural hospital administrators one question: ‘If all your bills were paid at the Medicare rate last year, what would happen?’ ” Delaney added. “And they all look at me and say, ‘We would close.’ ”
The fundamental question is whether hospitals have deep enough operating margins to swallow lower payments for their commercially insured patients. Under Medicare-for-all or even a public option approach, some or all of these patients would be transferred from the commercial market to government plans.
Medicare pays hospitals only 87 cents on the dollar of their estimated average costs, while private payers pay hospitals a hefty 145 cents. The gulf has only grown wider over the past few decades, meaning hospitals increasingly rely on the revenue from caring for patients with employer-sponsored or individual market coverage — coverage that would be eliminated under Medicare-for-all.
But the issue is more complex than it first appears. That’s because hospitals are now in two different categories: the well-endowed major hospital systems (think the Inova hospitals in Northern Virginia or the Mayo clinics) and hospitals in underserved rural areas.
It’s the rural hospitals that are most in danger under Medicare-for-all.
They’re already in trouble, often caring for more Medicaid patients (who bring even lower reimbursements than Medicare) and referring to other hospitals for the most revenue-generating surgical services. And they’re on the decline. More than 100 have closed since 2010. Out of 7,000 areas with health professional shortages in the United States, about 60 percent are in rural areas.
So it’s not surprising that hospitals and the rest of the expansive health-care industry have also seized on the narrative that any new government-backed plan — from Medicare-for-all to a public option and everything in between — would shutter these types of hospitals.
An industry coalition that has been running ads against Medicare-for-all and public-option proposals released a study yesterday seeking to prove that point. The analysis, conducted by Navigant, predicts that up to 55 percent of rural hospitals could be at high risk of closing if many people with workplace and marketplace coverage switched to a public-option plan paying Medicare rates.
The analysis looked at the effects on hospitals’ revenue and their subsequent risk of shuttering under several different scenarios. The most dramatic scenario assumed that half of everyone on workplace coverage and 85 percent of those in the individual market moved to a public option.
“The availability of a public option could negatively impact access to and quality of care through rural hospitals’ potential elimination of services and reduction of clinical and administrative staff,” says the report, commissioned by the Partnership for America’s Healthcare Future.
From the American Hospital Association:
Offering a government insurance program reimbursing at Medicare rates as a public option on the health insurance exchanges could place as many as 55% of rural hospitals, or 1,037 hospitals across 46 states, at high risk of closure. #AHAtoday https://t.co/SD6VcBhI1Y— American Hospital Association (@ahahospitals) August 7, 2019
But it’s a different story with urban hospitals with hefty endowments. They would definitely feel effects from Medicare-for-all, but they also might have the capacity to do more with less.
As these hospitals have consolidated into large systems, they’ve gained more negotiating power with insurers. And independent analyses of Sanders’s Medicare-for-all plan say it would save hospitals some administrative costs to help make up the difference.
And then there’s this: Per-person spending on health-care in the United States is roughly double of that in other high-income countries. There are many reasons for the troubling reality, but one inescapable fact is that hospitals can get away with charging far more for surgeries and procedures.
“There is no way of reducing the cost of health care unless we reduce the cost of hospital services,” said Stanford University professor Kevin Schulman, who recently published an article looking at the effects of Medicare-for-all on hospitals.
But he acknowledges they would pay a steep price. Under Medicare-for-all, hospitals could see their average 7 percent profit margins fall to negative 9 percent — a $85.6 billion annual loss, Schulman wrote.
“Supporters of Medicare-for-all should anticipate strong hospital political opposition,” he wrote.
AHH: Medicare will now cover CAR T-cell therapy, an innovative treatment for blood cancers, nationwide, rather than have the program’s regional administrators determine whether to cover treatment, our Washington Post colleague Laurie McGinley reports.
The change is meant to clear up confusion, and Trump administration officials said it would ensure patients receive “consistent and predictable access” to critical therapies.
Centers for Medicare and Medicaid Services Administrator Seema Verma acknowledged “the agency, which originally had scheduled this coverage decision for late May, has been struggling to figure out how to cover and pay for the treatment, ” Laurie writes. “The treatment costs $375,000 or $475,000, depending on whether it is used for advanced lymphoma or pediatric leukemia. Hospital stays can add hundreds of thousands of dollars to the cost of care.”
OOF: The FDA said that since it announced an investigation in April into links between e-cigarette use and seizures, it received 92 reports of people suffering from seizures after using such products. The agency is looking into 127 cases in all of people having seizures after using vaping products.
“We appreciate the public response to our initial call for reports, and we strongly encourage the public to submit new or follow-up reports with as much detail as possible,” acting FDA commissioner Ned Sharpless said in a statement. “Additional reports or more detailed information about these incidents are vital to help inform our analysis and may help us identify common risk factors and determine whether any specific e-cigarette product attributes, such as nicotine content or formulation, may be more likely to contribute to seizures.”
Former FDA commissioner Scott Gottlieb, who during his tenure sought to aggressively address what he called an “epidemic” of youth vaping, told CNBC’s Angelica LaVito that while it was expected the April FDA announcement would lead to more individuals reporting cases of seizures after vaping, “92 additional reports over that short period of a time is concerning.”
OUCH: The head of Swiss pharmaceutical giant Novartis defended the company for waiting to tell the FDA about manipulated data submitted in an application for gene therapy until after that therapy was approved.
In a conference call with financial analysts yesterday, chief executive Vas Narasimhan said the company “tried to do the right things,” Stat’s Damian Garde reports.
"We understand the agency has a different perspective, which we respect, but we’ve tried to be transparent, thorough, science-based, and, most importantly, patient-oriented to ensure that we never compromised patient safety, efficacy, or product quality during any moment during all of this," Narasimhan said.
The FDA said this week that Novartis submitted falsified data for the recently approved gene therapy Zolgensma. “In March, Novartis learned that some of its employees had manipulated data related to Zolgensma, a treatment for spinal muscular atrophy that was then under FDA review,” Damian reports. “Instead of informing the agency right away, Novartis conducted an internal investigation and submitted interim results to the agency on June 28, after Zolgensma was already approved, drawing an uncommon public rebuke from FDA officials Tuesday.” Some of the scientists involved are being "exited," Narasimhan said.
— President Trump was greeted with groups of protesters during his visits to the pair of grief-stricken cities in the aftermath of a weekend of mass shootings.
Outside Miami Valley Hospital in Dayton, Ohio, there were protesters with signs and a massive blimp depicting Trump as a baby waiting for the president. Meanwhile, Trump stayed mostly out of public view during his stop there. “In his only public remarks during the trip, Trump lashed out at Sen. Sherrod Brown of Ohio and Dayton Mayor Nan Whaley, both Democrats, over their characterization of his visit with hospital patients in Dayton,” our Post colleagues Ashley Parker, Philip Rucker, Jenna Johnson and Felicia Sonmez report.
Brown and Whaley had been critical of “Trump’s divisive rhetoric and Republican resistance to gun-control legislation" although they'd also said positive things, our colleagues write.
“They were hurting. He was comforting. He did the right things. Melania did the right things,” Brown told reporters. “And it’s his job in part to comfort people. I’m glad he did it in those hospital rooms.”
The reporters write: “The traveling press corps was not allowed to observe Trump’s visit with three victims who remained hospitalized. It fell therefore to White House aide Dan Scavino to proclaim in a tweet that Trump 'was treated like a Rock Star inside the hospital.' ”
—Ahead of Trump's visit to El Paso, Rep. Veronica Escobar (D-Tex.) said she wouldn’t meet with the president, instead joining groups at a protest rally in Washington part near the the University Medical Center where he was meeting with shooting survivors.
“Within hours, hundreds of people signed an online petition posted by medical workers at UMC," USA Today’s Doug Stanglin and Trevor Hughes reported. The petition said this: "Given President Trump’s rhetoric on immigration, we believe that a visit to our medical campus will be harmful for both the families affected and medical teams caring for those families."
— Trump told reporters before he left Washington earlier Wednesday that he was open to calling lawmakers back to Washington from recess to address gun legislation.
“I’m looking to do background checks. I think background checks are important. I don’t want to put guns into the hands of mentally unstable people, people with rage or hate, sick people. I don’t want — I’m all in favor of it,” he said.
He said there was “no political appetite” for a ban on assault rifles but reiterated support for legislation on background checks.
“There’s a great appetite — and I mean a very strong appetite — for background checks. And I think we can bring up background checks like we’ve never had before. I think both Republican and Democrat are getting close to a bill on — they’re doing something on background checks.”
— As lawmakers introduce measures to try to tackle surprise medical bills, doctors and hospitals have pushed back, arguing some changes could mean financial difficulty for providers and fewer options for patients. But their arguments don't always hold water.
One group, Physicians for Fair Coverage, a coalition of large companies that represent medical practices, launched a $1.2 million ad campaign that began airing last month warning that some lawmakers’ proposals would hurt vulnerable patients and shred the safety net, Kaiser Health News’s Rachel Bluth reports. In a fact-checking piece produced with PolitiFact, Rachel finds there's little evidence backing up those claims.
A few of her key points:
—There are two major solutions on the table for halting suprise billing. One is arbitration, which would send the insurers and health care providers through an independent review to determine a fair price. The other is benchmarking payments to an existing set of rates. That's what the ad is referring to.
—The PFC ad says if lawmakers adopt a benchmarking system, “insurance companies will offer doctors artificially low in-network rates, which, in turn, will bring down out-of-network rates.” The concern is essentially that low rates would make it hard for some hospitals to operate, and some may have to close. A spokeswoman for PFC also said a benchmarking system means “insurers can push doctors out of their network, by cancelling contracts or demanding artificially low rates, in order to make the benchmark rate the default.”
—But Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy, told Rachel there’s “not enough data yet from California to say whether insurance companies are kicking doctors out of networks.”
“Neither of the proposed pieces of legislation would cut money to any programs, specifically Medicaid, CHIP or Medicare,” Rachel writes. “This claim raises serious health system alarms — reduced access to care, higher premium costs and even shuttered emergency rooms — without logically supporting these concerns.”
— And here are a few more good reads:
- The Centers for Disease Control and Prevention hosts a seminar on “Genomics, Big Data and Data Science in Public Health” on Friday.
In the wake of two mass shootings, President Trump denied he uses divisive rhetoric, and said "our country is doing very well":