The G e Growing g Gap Between een M Med edicare a e and Com Commercial Hos ospital al P Payments: s: Should We B e Be e Concer erned ed Stuart H. Altman Ph.D. Chaikin Professor of Health Policy Heller School for Social Policy and Management Brandeis University
Original Medicare S System P Paid Hospitals Ba Based On Its Co Costs and Simi milar t to Private Payme ments Even Under The 1983 Medicare DRG Hospital Payment System---Overall Medicare Payments Similar to Private Payments
Relations nshi hip B p Between H n Hospi pital Cos osts a and M Medicare Paym yments Ch Changed in 2000 2000 And Gap Between Private Payments and Medicare Accelerated
Hospital P Paid Significantly Lower r Am Amounts By Medicare a and Medicaid 200% 180% 175% 160% 160% Pvt Ins. Payt 140% as Percent of Medicare 125% 120% Payments 106% 100% 100% 90% 90% 85% Medicare 80% Payt. Growth 60% Rate 40% Payments in $2012 and adjusted for patient mix and 20% geography 0% 1996 1998 2000 2002 2004 2006 2008 2010 2012 Seiden et al, Health Affairs December 2015
By 2 2017 A Aver erage P e Private P e Payments ts T To Hospitals ( (Outpatient a and I Inpatient) Wer ere C Clos ose t to 180% of of Med edic icare
Recen cent R RAND S Study I Indicated F For a S Sample le of of Patie tients i in 25 States S Stu tudie ied--- --- Private e Insurance P Paid H Hospital O On A Average 240% of of Medicare R e Rates es
SO– Sh Shou ould W We B e Be e Concer erned ned?
The e Growing G Gap B Between en Gover ernmen ent a and P Private P e Paym ymen ents Affects Ho Hospitals Differ eren ently y Also Ratio of Private to Medicare Hospital Payments Are Significantly Different in Different States
Hospit ital al Tot otal al A All-Payer er M Margin b by U Urban a and Rural L Location a and Critic ical al Access H Hospit itals als 2006 2006-2016 2016 Rural Urban Critical Access Hospitals 8 7.4 7.3 7.0 6.6 7 6.5 6.4 6.1 6.0 5.8 5.7 6 Margin (percent) 5.3 5.3 5.0 4.9 4.9 4.8 4.8 4.7 4.6 5 4.4 4.4 4.3 3.7 3.6 3.6 3.6 4 3.4 3.4 3.3 2.8 3 2.1 2.1 1.7 2 1 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Fiscal Year SOURCE: MedPAC analysis of Medicare cost report data from CMS, MedPAC June 2018 report. 9
In Som Some St States RA RAND S Study y Indicated-- --- Private e Rates es W Were e Over 300% 300% of of Medica care. Lowest States es Were 1 e 150-- --160 160%
Private e Insurance e Relative e to Medicare e Prices es for H r Hospital Care by S State 2017 2017* Inpatient + Outpatient 350% 300% 302% 311% 269% 277% 279% 283% 250% 208% 217% 219% 221% 225% 228% 229% 229% 234% 235% 236% 237% 241% 243% 244% 200% 156% 169% 178% 186% 150% 100% 50% % MI PA NY KY TN VT KS MO IL MA FL NM NC LA NH WA OH GA TX CO MT WI ME WY IN Inpatient + Outpatient Source: RAND Corporation, Priced Paid to Hospitals by Private Health Plans Are High Relative to Medicare and Vary Widely, Findings from an Employer-Led Transparency Initiative. Chapin White, Christopher Whaley 2019 *Relative prices are the prices paid by private insurance relative to Medicare for similar type patients.
What t Ab About G t Goi oing F g For orward?
If Med edic icare P Payments C Con ontin inue t to o Be e Constrained ed a and P Pvt. P Paymen ents G Grow ow--- --- Could T There B Be Access L Limits f for Medicare Patients? The Growing Use of Restrictions on Physician Coverage for Medicare Patients--- ” Concierge Care” --- Could be Just The Beginning
Le Let Me Be Be Very Cl Clear--- --- I a am N NOT Advocating for Highe her Hospital Paymen ents I Believe as Do Many Economists That Health Care Spending Can Only Be Constrained by Reducing The Growth in Revenues
But S Should Constraints Only Come From Lower r Govern rnment P Payments and Shoul uld d Government Ignore The Growth of Relative ve Pr Private Rates--- --In T Two S Sta tates- -- --Maryland and Massachusetts T The An Answer r is NO! !
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