Medicare for All Would Decimate New York Hospitals
With election season heating up, so is the conversation about single-payer health care. Is it appropriate for New York? Is it appropriate for upstate? What about hospitals?
Upstate New York hospitals have their own unique geographic, economic and patient-mix factors; there are 54 hospitals and health systems in the Iroquois Healthcare Alliance’s region alone, and 217 hospitals throughout the state. Additionally, IHA members span over 28,000 square miles, across 32 counties of New York. Hospitals upstate range from large academic teaching institutions to sole community hospitals to 15-bed critical access facilities. Many are often the only safety-net providers in their communities. Single-payer for all of these hospitals is, therefore, obviously, complicated. ADVERTISING
What isn’t complicated is the apparent appetite for some level of government involvement in health care, mostly because it already exists. New York operates one of the largest Medicaid programs in the country, totaling nearly $60 billion annually, with 5 million enrollees. Approximately 1 in 3 New York City residents and approximately 1 in 4 in the rest of the state are enrolled in Medicaid.
Hospitals and health care providers throughout New York remain reliant on government, both Medicaid—and on Medicare—for patient revenue. In fact, Medicare is the largest payer upstate, because of the aging population. For upstate hospitals, Medicare accounts for 47% of hospital inpatient revenue, while Medicaid only accounts for 15%. Private insurers account for 20% of total inpatient revenue.
In dividing the tab for hospitals three ways between Medicaid, Medicare and private insurance, government (Medicare and Medicare) is the entity footing most of the bill. Unfortunately, government as a payer hasn’t exactly been a win for the hospital industry. Nearly half of all IHA member hospitals reported negative operating margins in 2016, and the median operating margin for IHA hospitals was a meager 0.3% that year.
Upstate hospitals are also paid less than their counterparts in downstate for the actual cost of both Medicare and Medicaid. Downstate hospitals receive 36.4% in Medicare, 21.6% Medicaid and 14.4% in private insurance. Looking at the data per day by payer, Medicare provides hospitals $2,337 per day upstate and $3,012 downstate. Medicaid follows a similar pattern: $2,150 upstate, $2,929 downstate.
But the most pronounced difference is in private insurance. These insurers pay upstate hospitals $3,767 per day and downstate hospitals a staggering $6,105. Private insurers pay over 60% more than government per day to hospitals located downstate.
A single-payer health system can only be examined, discussed and debated when the payer is known—and most importantly when the reimbursement structures are known. Single payer that uses rates similar to what private insurers pay downstate hospitals per day would be positive for upstate hospitals. A system based on the current rates being paid by Medicaid and Medicare would hurt all hospitals, particularly devastate upstate hospitals, and likely reduce access to health care in many communities.
Gary North forecasts the problems correctly:
He sees what is coming: short-changing hospitals. At that point, they will start going bankrupt. There will be closings.
There will be rationing. People will not be able to schedule operations without waiting.
What will happen to people who cannot afford private healthcare programs, which will rise in price due to rising demand? The rich have concierge physicians. The upper middle class will start flying to the Caribbean. They will pay for the services they want. But the middle class will be caught in the rationing system.
