EXPLAINED: This is the part of 'Medicare For All' that you never hear about
Sen. Bernie Sanders and his allies talk a lot about how “Medicare for All” would take back money from insurers and drug companies, and use those savings to help make sure every American has generous health insurance. That is accurate.
But actually crafting a policy that would cut hospital payments enough to free up big sums of money without adverse effects wouldn’t be easy and getting such a policy through Congress could be even tougher. The hospital industry is already pushing back and, as this debate moves forward, it’s only going to push harder.
This is not how developed countries typically operate. Even in countries like the Netherlands, which provide universal coverage through private insurance, government limits what hospitals make by establishing fees, overall budgets, or some combination of the two. Here in the U.S., more than half the states used to regulate hospital prices in one way or another and, in the 1970s, then-President Jimmy Carter pushed hard for legislation to regulate hospital charges nationally.
Neither the Sanders nor Jayapal legislation specifies exactly how much the new public plans would end up paying hospitals. Without those and other details, it’s difficult to say confidently what impact the regulations would have, given all the moving policy pieces each of these plans entails. The story is the same within the U.S., where hospital prices vary enormously from region to region. It’s not the hospitals with the best outcomes charging the highest prices, research has shown pretty consistently. It’s the ones with the most market power ― in some cases, because they have monopolies and are basically able to demand what they want from private insurers.
Limiting Hospital Prices Could Be Pretty DifficultIf you talk to the executives who run these hospitals and the analysts who study them, they will tell you that there is no single strategy administrators use to make operations more efficient. Instead, it’s simply a matter of finding lots of little ways to do more for less money ― whether it’s refusing to buy every new tool specialists request, even when older ones will do just fine, or checking in on patients after they’ve left the hospital.
Whether or not those figures tell the whole story, even advocates for more ambitious cuts to hospitals, like Don Berwick, co-founder of the Institute for Health Innovation and a former administrator of Medicare and Medicaid, say “there is a lot of variation” from institution to institution. “Small and rural hospitals are highly vulnerable,” Berwick said. “One needs to be very gentle.”
Some suggested regulating prices only in markets where hospitals have monopolies. Others echoed the sentiments of Hilary Haycock, president of Harbage Consulting, a California-based firm that works with hospitals and other providers of medical care. She thinks price regulations could work if hospitals had enough time to adjust, suggesting that “more of a 10-year horizon is reasonable.”
But giving those institutions extra money, like easing up on payment reductions, has implications for the budget math of health reform, because it could increase the price of health care ― and thus the price of a new national health system.
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