Medicare public option would 'compound financial stresses' of hospitals, industry report says

A Medicare public option proposal could result in a cut of nearly $800 billion to hospital-based services over a 10-year period, according to a new report released by the American Hospital Association and the Federation of American Hospitals.

"For hospitals, the introduction of a public plan that reimburses providers using Medicare rates would compound financial stresses they are already facing, potentially impacting access to care and provider quality," the report says.

The report examined the potential effects of the Medicare-X Choice Act using data from the U.S. Census Bureau's American Community Survey, the Medical Expenditure Panel Survey and other sources.

It found a plan to establish a government-run public health insurance plan on the ACA health exchanges beginning in 2024 and pay providers using Medicare rates — could result in nearly $800 billion in cuts to hospitals from 2024 to 2033, as well as "significant disruption" to the federal health law's employer-sponsored insurance market. 

The report also found the proposal could lead to only 5.5 million people gaining coverage compared to about 9 million people that would gain coverage by expanding the current public/private health plan structure.

The report further projects national healthcare spending would decrease by $1.2 trillion over 10 years under Medicare-X Choice, with a cut of $774 billion in spending for hospital services.

Access the full report here.

 

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