Study: Hospitals could lose money on public option plan

Across the political spectrum, there's debate as to the effect a government-run public option plan would have on the healthcare industry, as a whole. Most of the arguments seem to center on whether such a plan would impede the ability of the private health insurance industry to compete. But providers have reasons to be concerned about the impact on their financial health, as well.

According to one study published this week in Health Affairs, the impact of a public option plan will vary depending on just how many Americans with existing private coverage migrate to the government plan. The more popular the public option gets, however, the worse things look, it seems. (It should be noted that it was co-funded by America's Health Insurance Plans, the health insurance industry's trade group, which staunchly opposes the public option.)

Hospitals, in particular, will benefit if uninsured patients pick up such a plan--but if too many of those who currently have private insurance move to the public option, hospitals will suffer, researchers predict. After all, they note, a public plan is unable to pay much more than the actual costs of care, while private insurers offer more of a margin on care.

The study used data from 282 California hospitals to illustrate the impact hospitals would experience under different implementations of the public option.

To learn more about this study:
- read this Health Leaders Media piece