Harvard researchers: 'Medicare for All' wouldn't overwhelm hospitals

There seems to be no evidence that supports the belief that there would be a surge in hospital use if the government implements "Medicare for All," according to a new analysis published in the Annals of Internal Medicine

Much of the debate around Medicare for All centers on a fear that there will be a large surge in hospital use, possibly overwhelming the system. But looking at data following both the implementation of Medicare in 1966 and the Affordable Care Act (ACA) in 2014, researchers at Harvard Medical School found no significant increase in hospitalizations.

The analysis, conducted with the help of The City University of New York at Hunter College, instead shows a redistribution of care, and the increase in hospital care among the newly insured would likely be offset by decreases in hospital use for healthier and wealthier Americans.

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“When Medicare was being debated in the 1960s, critics warned that the surge in demand among seniors would overload the system, but that’s not what happened,” Adam Gaffney, M.D., lead author of the study and president of the Physicians for a National Health Program, told FierceHealthcare. “Seniors did get more hospital care, which they needed. But wealthier and younger people spent a bit less time in the hospital—which was a good thing. Americans, after all, too often receive unnecessary procedures and elective admissions.”

Following the implementation of Medicare and Medicaid back in 1966, and then the implementation of the ACA in 2014, each of the programs added 10% of the U.S. population into the insurance system.

About the same percentage of Americans are estimated to be put on insurance if Medicare for All is enacted.

Looking at both national surveys and admission records, hospital admissions averaged 12.8 for every 100 persons in the three years before Medicare began, and admissions averaged 12.7 per 100 people in the four years after Medicare began. At the same time, Medicare increased admissions by 3.7 people per 100 among elderly patients and less than one for the poorest of the population while hospitalizations fell 0.5 for younger and wealthier people.

Similarly, average hospital admissions were 9.4 per 100 people pre-ACA and were nine per 100 people, on average, in the two years after implementation. After the ACA, admissions rose by 1.5 per 100 among sicker Americans, but dropped 0.6 per 100 among people in good health.

In essence: Coverage expansions redistributed care. 

Gaffney thinks that Medicare for All would have a relatively small net effect on hospital budgets.

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“Hospitals should achieve large savings on administration and overhead once we mover to a single-payer system—U.S. hospitals, after all, spend twice as much on administration compared to Canadian hospitals,” he said.

Additionally, hospitals will provide less care that goes unreimbursed, because everyone will be covered. Gaffney says that, as a result, payments to hospitals can fall somewhat without compromising the quantity and quality of care they provide, or, alternatively, that hospitals can increase the amount of care they provide within their existing budgets.

“Future estimates of the cost of Medicare for All should account for the fact that hospital utilization increases are likely to be modest. In other words, we can in fact afford to cover everybody,” Gaffney added.