In the midst of so many Democrats calling for "Medicare For All" plans, it's worth taking a moment to consider just what that would mean for the quality of America's healthcare system.
Here's a simple fact: on average, Medicare approves payment for hospital services that only covers about 85% of the hospital's costs to provide those services. In other words, a person has an emergency, gets sent to the ER, is admitted to the hospital for surgery, has the operation, and then stays for another 4 days of recovery and treatment. The cost incurred by the hospital to provide those services is $80,000. Medicare, on average, approves payment of $68,000. Medicare then pays the hospital about $56,000 and the patient is responsible for the other $12,000. If the patient has a Medigap policy, that company pays the $12,000.
Since the Medicare For All plan would end private healthcare coverage, it is unclear if the companies providing Medigap coverage would stay in the business. If they didn't, then the patient in the example above would be left with a huge bill of $12,000 to pay.
The focus of this post, however, is the hospital and how it would fare under Medicare for All. The hospital would have incurred $80,000 in costs and it would be paid at most $68,000. Needless to say, if those numbers applied to everyone, the hospital would have to reduce costs or it would go broke and have to close. So how would those costs be cut? Some people talk about reducing the high fees paid to doctors, but that is irrelevant here. The doctors bill Medicare separately; we are speaking only of the hospital. The hospital could cut the salaries of nurses, but most nurses don't make high salaries, so such a move would really squeeze the staff. The hospital could cut the administrative staff because it would no longer have to deal with private insurance companies, but that seems unlikely since there would need to be extra staff to deal with Medicare and the two would balance out. No, the only likely place to cut is in the quality of care. Instead of there being one nurse for four patients, the hospital could cut that to one nurse for six patients (these are just numbers used for illustration.) There could be fewer people in food prep and reduced quality (if such a thing were possible) of the food served. All sorts of care given to the patients could be watered down.
Under today's system, Medicare does pay 85% of costs. The hospitals make it up by charging the patients with private insurance much higher fees. The hospital, on average, charges upwards of 30% more than costs for the private insurance patients. By getting rid of private insurance, the Medicare For All proposal will squeeze the hospitals by removing this source of income. The inevitable result will be that the quality of care for the average patient will be dramatically reduced.
In short, Medicare For All means a drastic reduction in the quality of the healthcare system for everyone but the truly wealthy. The rich will be able to pay privately for healthcare, but for the 99% who cannot pay in that way, the result will be long waits and lesser quality care. And then there's the huge tax increases that will be necessary to fund the system -- but that's a subject for another post.
Here's a simple fact: on average, Medicare approves payment for hospital services that only covers about 85% of the hospital's costs to provide those services. In other words, a person has an emergency, gets sent to the ER, is admitted to the hospital for surgery, has the operation, and then stays for another 4 days of recovery and treatment. The cost incurred by the hospital to provide those services is $80,000. Medicare, on average, approves payment of $68,000. Medicare then pays the hospital about $56,000 and the patient is responsible for the other $12,000. If the patient has a Medigap policy, that company pays the $12,000.
Since the Medicare For All plan would end private healthcare coverage, it is unclear if the companies providing Medigap coverage would stay in the business. If they didn't, then the patient in the example above would be left with a huge bill of $12,000 to pay.
The focus of this post, however, is the hospital and how it would fare under Medicare for All. The hospital would have incurred $80,000 in costs and it would be paid at most $68,000. Needless to say, if those numbers applied to everyone, the hospital would have to reduce costs or it would go broke and have to close. So how would those costs be cut? Some people talk about reducing the high fees paid to doctors, but that is irrelevant here. The doctors bill Medicare separately; we are speaking only of the hospital. The hospital could cut the salaries of nurses, but most nurses don't make high salaries, so such a move would really squeeze the staff. The hospital could cut the administrative staff because it would no longer have to deal with private insurance companies, but that seems unlikely since there would need to be extra staff to deal with Medicare and the two would balance out. No, the only likely place to cut is in the quality of care. Instead of there being one nurse for four patients, the hospital could cut that to one nurse for six patients (these are just numbers used for illustration.) There could be fewer people in food prep and reduced quality (if such a thing were possible) of the food served. All sorts of care given to the patients could be watered down.
Under today's system, Medicare does pay 85% of costs. The hospitals make it up by charging the patients with private insurance much higher fees. The hospital, on average, charges upwards of 30% more than costs for the private insurance patients. By getting rid of private insurance, the Medicare For All proposal will squeeze the hospitals by removing this source of income. The inevitable result will be that the quality of care for the average patient will be dramatically reduced.
In short, Medicare For All means a drastic reduction in the quality of the healthcare system for everyone but the truly wealthy. The rich will be able to pay privately for healthcare, but for the 99% who cannot pay in that way, the result will be long waits and lesser quality care. And then there's the huge tax increases that will be necessary to fund the system -- but that's a subject for another post.
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