Limiting commercial reimbursement to Medicare rates would save $352B this year: study

Total healthcare spending for privately insured Americans would be about $352 billion lower in 2021 if private insurers reimbursed healthcare providers at Medicare rates, according to analysis Kaiser Family Foundation released March 1.

KFF used data from MarketScan and FAIR Health to calculate the estimated annual reduction in healthcare spending by employers and privately insured patients that would result from limiting reimbursement to Medicare rates. 

The analysis found that reducing commercial reimbursement to Medicare rates would result in a  41 percent decrease from 2021's projected $859 billion in healthcare spending. It would also lead to aggregate employer contributions toward employee premiums to decrease by about $194 billion, supposing employers’ share of premiums stayed constant after private rates were reduced.

The study also discovered commercially insured patients would spend at least $116 billion less for healthcare, and the reduction in federal and individual healthcare spending for an estimated 19 million people in the non-group market would come to $42 billion.

Forty-five percent of the total healthcare spending reduction would be for outpatient hospital services, according to the analysis. Inpatient services would account for 27 percent, and physician office visits would account for 14 percent.

Measures such as Medicare for all, a public insurance option or regulatory controls over private healthcare prices could bring about these reimbursement rate reductions.

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