'Medicare for All' would reduce hospital operating margins by more than 20 percent, analysis finds

A "Medicare for All" health insurance system would take a significant toll on hospital revenues and net operating margins, according to a new Navigant analysis.

The analysis examined effects of two variations of Medicare as single-payer (excluding Medicaid) on a hypothetical medium-sized, regional, nonprofit five-hospital system, "Excelsior Health System."

The system has annual combined patient revenue of about $1.2 billion, as well as an existing positive operating margin of 2.3 percent. Commercial insurers within the system's network pay about 200 percent of what Medicare pays and make up about 25 percent of patient volume by charges.

Navigant examined how Excelsior would fare financially over a year under a Medicare for All scenario where Medicare did not increase payments to the system. The analysis found this scenario reduced revenue by about $330 million and left a negative margin of 22 percent.

Navigant also examined what would happen under Medicare as single-payer if Medicare enhanced payment to 120 percent of the current Medicare rates. Under this scenario, Excelsior sees revenue decrease by about $158 million, leaving a negative margin of 14 percent.

In both scenarios, Navigant said it assumed Medicare disproportionate share payments would decrease in proportion to the the number of people gaining coverage, as well as reductions in the costs of Excelsior's revenue cycle functions and administrative expenses.

The analysis also states that if Congress does not act on Medicare expansion after 2020, it would negatively affect hospitals as baby boomers shift from employer-based coverage onto Medicare. For Excelsior, this would lower revenue by about $100 million. 

Read the full analysis here.

 

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