How would hospitals navigate through Medicare for all?

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In this oddest of election years, where mainstream candidates promise to force foreign countries to reimburse our efforts to seal our borders, perhaps the weirdest statement I have heard is an actual discussion of the merits of a single-payer healthcare system.

That's because of Vermont Senator Bernie Sanders, who's had the temerity to say that he would also raise taxes to pay for a single-payer system.

Any sort of expansion of healthcare benefits has been one of the many third rails of politics. It's typically tagged as a Socialist enterprise, the legacy of loser countries like Canada and Denmark, where I'm always told are choked with long lines of patients waiting for healthcare services. Since citizens of those countries live years longer than us, I imagine that wait is interminable.

That's been the enduring legacy of Ronald Reagan's 1960 spoken word album proclaiming that ready access to healthcare services was no different than a samovar in our family rooms. That has caused most politicians to shy away from single payer for the past half-century, and almost certainly doomed the so-called "public option" floated by the Obama administration early in the Affordable Care Act debate.

But Sanders is a self-proclaimed Socialist. To his credit, he doesn't mind taking any heat putting forth the idea of single-payer. To our nation's credit, that heat has been about as scorching as what emanates from all those tree-hugger LED bulbs we've been putting into our light fixtures in recent years. That the life spans of poorer white people in this country are on what was once an unthinkable trajectory is probably making this subject less taboo.

The biggest criticism has actually been from Hillary Clinton, who's been slamming Sanders' proposal as too costly and a threat to the overpriced healthcare services provided by the Affordable Care Act. It's been a big boost to her in the polls.

While proposing single payer is apparently no longer a big deal, the mechanics of getting it through the Congress remain impossible. But now that it is actually being discussed by the nation's most prominent politicians in an election year, I would say within 10 to 12 years there will be single-payer bills seriously considered on Capitol Hill. Given the right circumstances, one of those bills has a good chance of becoming the law of the land.

What would that mean for hospitals and healthcare finance?

Presuming single-payer would be based on the most politically palatable and expedient alternative--the expansion of the beloved Medicare program to all--and it will put hospital leaders  on their toes. Their bottom lines are the result of a complicated but familiar juggling act of using surplus commercial insurance payments to cover losses on Medicaid, uninsured and some Medicare patients, all the while jockeying to keep those commercial rates ever upward.

Meanwhile, Medicaid still pays rates way below Medicare. Under Medicare for all, it would seem unlikely dual payers would remain for a significant period of time. But it is likely that given 30 million or so more Americans would have insurance coverage, the programs would be gradually merged--and Medicare rates would be cut. Although revenue streams would be more predictable, they would also be smaller, meaning many hospitals would probably cut the scope of their capital projects and ancillary programs moving forward. On the other hand, there would be no more uncompensated care, and charity care would likely be confined to waiving co-payments and deductibles.

Commercial insurers are also not likely to go away. Expect them to remain big players, selling supplementary and Part D policies to consumers, and continuing to manage tens of millions of Medicare Advantage enrollees. Hospitals would still maneuver to get optimal reimbursement from these payers, just on a smaller scale than today.

Drug companies would probably be the biggest losers. It would be singularly odd if the federal ban on Medicare against negotiating bulk prices would remain in effect under a single-payer system. Whether that loss of revenue would impact the research and development efforts these drugmakers say sky-high U.S. prices subsidize remains to be seen.

In the worst-case scenario, a Sandersesque proposal would probably curtail the ambitions of the nation's biggest teaching hospitals and make miracle drugs a little less commonplace. At the same time, Medicare's huge new scope would give it more impetus to push providers on sorely needed population health and other cost-saving initiatives.

In the end, Americans would probably be less inundated with cutting-edge healthcare they couldn't afford anyway, while leading longer lives that would be less clinically complicated at the end. To paraphrase some of the candidates, that would be huge–and maybe even a little classy. – Ron (@FierceHealth)

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