If Congress enacted Medicare-X, the impact on hospital spending would be negligible, even for underserved populations, according to a new report.
Analysts at the left-leaning think tank Urban Institute dug into the potential impacts of the program, which was proposed in legislation introduced by Sens. Tim Kaine, D-Virginia, and Michael Bennet, D-Colorado, in February. The bill would create a public option plan available to people buying insurance for themselves or in a plan sponsored by small employers.
The data were collected from over 4,000 U.S hospitals via the 2019 American Hospital Association Annual Survey, round four of the RAND Hospital Price Transparency Study and the Healthcare Cost Report Information System, according to the report.
“The effects are small, and the differences across racial and ethnic groups are also very small,” Fredric Blavin, Ph.D., a principal research associate in the Urban Institute’s health policy center and one of the research report’s co-authors, told Fierce Healthcare.
However, that’s as much as Urban Institute researchers can suggest at the moment, as they note in the study that measuring the effects of something like Medicare-X is “extremely difficult.”
“These outcomes depend upon several factors, some of which are policy design choices and some of which rely on our ability to predict hospital and consumer behavior,” the research report states.
Medicare-X would decrease hospital spending by 1.4% nationally, according to the report. Different hospitals would see different decreases depending on what type of coverage their patients have.
“This particular public option, which intends to lower premiums and out-of-pocket costs for consumers who are in the individual market or the small-employer market—those individuals will save money,” Blavin said. “On the other hand, the hospitals and providers that serve them will experience some reduction in revenue because the public option lowers the payment rates for individuals in those markets closer to Medicare reimbursement rates.”
While the data don't delineate individual hospitals' payer mix, Blavin said that hospitals that treat many patients with employer-sponsored coverage would likely be less impacted by Medicare-X.
Blavin and his co-authors, Linda J. Blumberg, Ph.D, and Michael Simpson, also wrote that examining how a public option could impact underserved patients must account for more than just reimbursement rates.
“These include increased affordability for households in the form of lower premiums and out-of-pocket costs,” the research report said. “Such savings have the potential to improve access to care for people with financial barriers to obtaining services. In addition, a public option could rely upon a provider payment structure that more closely reflects the resources necessary to provide medical services than current commercial insurance payments do.”
The study projected that non-Hispanic Black patients would see the least benefit from a public option, with hospital spending for this population likely to decrease by 1.1% nationally. By comparison, the analysts estimated that costs would decrease by 1.4% nationally for non-Hispanic white patients and by 1.5% for Hispanic patients.
Black and Hispanic populations would be the most likely to retain their current coverage, according to the report, even if a Medicare-X public option were enacted.
However, the analysts added that the results would vary nationally, and the results would be felt differently depending on where the patients live. For example, people living in states that have not yet expanded Medicaid are more likely to secure coverage on the Affordable Care Act's exchanges and would see greater benefits from a public option.
In addition, researchers projected that Medicare-X would:
- Affect provider payment rates for 12.3% of the population, or 41.8 million people, but 88% of individuals would see no change in hospital payment rates.
- Reduce household spending for previously insured people affected by Medicare-X by 4.8 percentage points.
- Probably impact hospital revenues the most in parts of the country where commercial health plans pay more. Hospitals with lower Medicaid caseloads would tend to have larger revenue declines with a public option in place.