Hospitals oppose potential rebirth of 'public option' coverage

Pillar of building etched with the word insurance

Under pressure from onetime rival Bernie Sanders and the liberal wing of her party, Hillary Clinton has pushed for a “public option” form of coverage in the state and federal health insurance exchanges.

The decision is considered to be a middle ground option away from Sanders' primary campaign push for single-payer coverage. The proposal was recently endorsed by President Barack Obama.

However, the public option has drawn fire from the hospital sector, which fears it would depress the payments it receives to provide care. As a result, the American Hospital Association and the Federation of American Hospitals reached out last week to the Democratic Platform Drafting Committee.

“Our members have serious concerns that creating a public option with Medicare-like payments would subvert those goals by depressing insurer payments to healthcare providers and disrupting the fragile finance system that sustains hospitals today,” said the one-page letter to committee chairman Rep. Elijah Cummings, (D-MD). It was signed by Federation President Chip Kahn and AHA Executive Vice President Thomas Nickels.

The letter noted that two-thirds of the two group's member hospitals received levels of Medicare reimbursements below cost of actually providing care, while the average operating margin on Medicare reimbursements for hospitals was negative 5.8 percent in 2014.

“Adding millions more enrollees whose healthcare would be reimbursed at Medicare rates would likely threaten access to needed healthcare services, particularly for those in vulnerable communities,” the letter said.

Caroline Pearson, a senior vice president with Avalere Health, told Bloomberg BNA that the public option was excluded from the Affordable Care Act due to pressure from both healthcare providers and the insurance industry. But should Hillary Clinton get elected President, and attempts and fails to get a public option passed through Congress, it likely would not be a huge liability for her.

“If Clinton supports this now, and can’t get it through Congress--I don’t know if that’s a major loss for her,” Pearson told Bloomberg BNA.

- read the AHA letter (.pdf)
- check out the Bloomberg BNA article