Why doctors and hospitals oppose expanding Medicare

Originally published in MedPage Today

by Emily P. Walker, MedPage Today Washington Correspondent

The notion of a public health insurance plan appears to be evaporating from the Senate’s healthcare reform bill, replaced in part with an expansion of Medicare — an idea that’s meeting resistance from doctor and hospital associations.

A proposal to scrap the public plan to allow people as young as 55 to “buy in” to the Medicare program by paying premiums emerged from negotiations between five liberal Democrats and five moderate Democrats.

They met earlier this week at the request of Senate Majority Leader Harry Reid (D-Nev.), who wants Democrats to reach an agreement that can get the 60 votes Reid needs to break a threatened Republican filibuster and pass the bill.

The senators emerged from the meeting tight-lipped about whether an agreement was even reached. Their plan was sent directly to the Congressional Budget Office (CBO) for a cost estimate, and senators said they don’t want to talk specifics until CBO returns a “score.”

“I can’t tell you what’s in it,” Sen. Charles Schumer (D-N.Y.), one of the five liberal Democrats in the group of 10, told reporters Thursday.

But reports have leaked out that the proposal moves away from a public insurance option — long championed by liberal Democrats but opposed by some moderate Democrats, one Independent, and virtually all Republicans.

Instead, a public plan might be established only as a backup, “triggered” if the reform bill fails to live up to its promise of expanding coverage and providing more affordable insurance options in the private market.

In its place, there would be a national insurance program provided by private insurers, modeled after the Federal Employees Health Benefits Program, which covers members of Congress.

President Obama offered his support for the effort.

“The legislation in Congress today contains both Democratic ideas and Republican ideas, and plenty of compromises in between,” Obama said Wednesday at a healthcare event in Washington.

“The Senate made critical progress last night with a creative new framework that I believe will help pave the way for final passage and a historic achievement on behalf of the American people. I support this effort, especially since it’s aimed at increasing choice and competition and lowering cost.”

But groups that stand to lose money if they have to accept more patients under Medicare — which reimburses doctors, hospitals, and other providers at lower rate than private insurance plans — were critical of the Medicare expansion idea.

“For the majority of America’s hospitals, Medicare payments cover less than the cost of care for hospital services to seniors, making it more difficult to make ends meet,” said Rich Umbdenstock, president and CEO of the AHA, in a statement.

“The Medicare buy-in could hamper hospitals’ ability to maintain the essential public services that patients and communities depend upon and to upgrade technology and facilities that make care better.”

As part of its original support for healthcare reform, the AHA made a deal with the White House that limits total losses to hospitals under the plan to $155 billion over 10 years.

The Federation of American Hospitals (FAH) and the AMA have also voiced opposition to the plan, according to the Washington Post.

The American Medical Association (AMA), which supported the House healthcare bill, hasn’t yet offered a stance on the Senate bill, but it has opposed expanding Medicare to younger people.

“The AMA is committed to legislation to expand affordable health insurance coverage to all Americans, but the AMA has longstanding policy opposing the expansion of Medicare given the fiscal projections for the future,” said AMA President J. James Rohack, MD. “We believe a health insurance exchange without an expansion of Medicare will provide more affordable choices and better access to care for Americans ages 55 to 64.”

The bill approved by the House included a public insurance plan, so an agreement would still have to be reached when the bills are combined by a conference committee.

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Comments

KG
Medicare reimburses less than the potential public option, which would likely behave like another private insurer. Giving CMS even more market power would mean even further reimbursement cuts, something for which we all know CMS has shown a new affinity. Reimbursement cuts are the only reason physicians and hospitals are spooked. All of the above is just rationalization. What’s bad for them is good for the patient and taxpayer.
Anon
Medicare works well for the seniors who use it, but it is based on a broken system that is at least partly responsible, through its fee-for-service model, for the healthcare inflation we see now. It hasn’t broken even in decades and contributed vastly to our debt. Why in the world would we want to expand something that is broken?
KG
Almost every payer is FFS, so that’s not really an argument against Medicare expansion, but rather the entire system. I’m with you on the ridiculousness of that model, but the political realities today preclude such a huge paradigm shift. (Everyone still remembers capitation.) Within the FFS system, Medicare has the least overhead, most experience, and market clout to lower cost.
http://www.blog.greatzs.com ZMD
How does Congress expect doctors and hospitals to support expanding Medicare when they can’t be bothered to prevent a 21% cut in reimbursement next month? And with further cuts threatened every year based on the SGR, who in their right mind would support this?
Anon
Other payers became FFS because Medicare created it. Essentially anything Medicare does is used as a baseline by the private insurers with the thinking, “if this is what the government does, why should we do much more?” Because of this, there is not that as much difference between Medicare and the private insurers as people think. So yes, Medicare did create that problem.
The problem with Medicare over the private insurers is that Medicare decided sometime ago that because it can’t sustain itself and balance its own budget, it solved its problems by paying hospitals and physicians less. So in a world where the senior population is growing, Medicare wants to pay even less. So, physicians and hospitals will be even busier, but paid less. Expanding Medicare to even more people will just make the bottom fall out faster.
alex
“Giving CMS even more market power would mean even further reimbursement cuts, something for which we all know CMS has shown a new affinity. Reimbursement cuts are the only reason physicians and hospitals are spooked. All of the above is just rationalization. What’s bad for them is good for the patient and taxpayer.”
By this logic if Medicare covered everyone then they could cut reimbursements by 90% and it would be great for patients and taxpayers. You don’t see the slightest flaw with this logic?
Further unilateral cuts by CMS in the name of cost saving are going to harm patient care. There are a great deal of unreimbursed activities that doctors do just because they take pride in what they do. Having CMS tell you every year that what you did this year is worth even less than what it was last year is a great recipe for a demoralized, unhappy workforce. Just ask the general surgeons… if you can find one.

Why doctors and hospitals oppose expanding Medicare

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