Healthcare News & Insights

Medicare for All: What this shift would mean for hospitals

The latest healthcare trend making headlines is Medicare for All, a concept designed to improve health coverage access for Americans. But would this change be helpful or harmful to hospitals? 

Right now, nothing’s set in stone. However, with an election year looming, healthcare access is a hot-button issue that’s sure to gain attention as time passes, and a Medicare for All system may become more feasible if voters are in favor of it.

Pros & cons of coverage

Medicare for All is touted by its supporters as a way to make sure every citizen has the opportunity to receive excellent health care.

As the name implies, instead of having patients on private insurance plans, all people in the United States would receive an expanded form of Medicare under a single payor system. Each person would have the opportunity to enroll, regardless of whether they’ve reached retirement age, and the plan would be administered by the Centers for Medicare & Medicaid Services.

In its current proposed form, Medicare for All would cover all necessary services for patients, including primary care and inpatient hospitalizations, according to an article from The plan would be more comprehensive than what Medicare currently offers, as patients would also receive dental, hearing and vision coverage.

Opponents to this plan say that it’ll drive up healthcare costs and worsen wait times for critical healthcare services, according to a New York Times article.

And even though more money may be spent on health care, hospitals could see less of it. It’s likely that, under Medicare for All, hospitals will be paid at Medicare rates for the services they provide, which is often lower than the reimbursement form private payors.

Medicare for All’s impact

According to a recent article in the Journal of the American Medical Association (JAMA), when looking at the numbers if patients with Medicaid and private insurance were all switched over to Medicare coverage, hospitals could potentially lose almost 16% in revenue once the shift happens. That’s a financial loss of $151 billion nationally. And revenue could continue to decline each year going forward.

That revenue loss could lead to the loss of up to 1.5 million administrative and clinical jobs in hospitals, depending on whether hospitals make up the difference by decreasing labor costs or lowering their operating margins.

To prevent this from happening, hospitals may have to start tightening their belts, taking actions such as delaying major building upgrades, allowing employees to retire without replacing them, and making smarter decisions about the supplies and products they purchase.

Facilities will also have to be even more aware of the value of the services they provide, making sure they’re providing high-quality care at a reasonable cost.

Time will tell whether the Medicare for All movement will become stronger as 2020 draws closer. We’ll keep you posted.

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