Democrats' Medicare buy-in could be a double-edged sword for hospitals and providers

Democratic lawmakers are taking another crack at a public option, this time in the form of a Medicare buy-in for employers and individuals on the Affordable Care Act (ACA) exchanges.

While more coverage options might seem like a positive from a hospital and provider perspective, it could be a double-edge sword financially. 

The proposal, introduced by Sens. Chris Murphy, D-Conn., and Jeff Merkley, D-Ore., has little chance of going anywhere in the Republican-controlled Congress, but it's the latest nod to the minority party's stance on the issue. Last year, Democrats introduced a more pumped-up version of the bill that would establish a national health insurance program for all U.S. residents billed as "Medicare-for-all."

The new bill "lets consumers and businesses decide whether they want to migrate to a Medicare plan or whether they want to stay on private insurance,” Murphy said in an announcement streamed on several platforms. Sens. Kamala Harris, D-Calif., and Cory Booker, D-N.J., also co-sponsored the bill. 

Medicare advocates praised the bill for expanding coverage and moving closer to a single-payer system, an approach lauded by some progressives. 

Nearly 60% of Americans favor a Medicare-for-all approach to coverage, according to a Kaiser Family Foundation poll that release results last month. That approach is even more favorable when framed as an option for anyone that wants it. 

RELATED: Doctors favor single payer, despite likely income hit

"Not only would Medicare become an option for more people, the Act would also improve Medicare for those who currently qualify, with the introduction of an out-of-pocket cap in the traditional Medicare program," Judith A. Stein, executive director at the Center for Medicare Advocacy, told FierceHealthcare.

According to research by the Texas Medical Association, government payers pay less than private payers for the same procedures. This could put hospitals in an awkward position about whether to support these policies.

Additionally, the Medicare Payment Advisory Commission, the main payment advisers to Congress, have said that hospitals' aggregate Medicare margin in 2014 was -5.8%; actually costing the providers money. Medicaid payments are even lower. 

Hospitals have also claimed that Medicare payments are already too low, and could cause concerns if more people change from private plans to a Medicare-based plan. 

The American Hospital Association declined to comment to FierceHealthcare on its position regarding the bill.