Hospitals’ average prices for commercial payers only slightly distanced themselves from Medicare rates from 2012 to 2019, although broad variations spotted between individual geographic regions suggest room for policies to limit commercial price growth, according to a recently published RAND Corporation study.
Citing data submitted by hospitals to the federal government’s Healthcare Cost Report Information System (HCRIS), researchers found hospital prices for commercial health plans in 2012 averaged 173% of what Medicare was paying. That gap widened by seven percentage points to 180% on average in 2019, they wrote in April’s Health Affairs.
But it not just hospitals. For physician services, private insurance paid 143% of Medicare rates, on average, ranging from 118% to 179% of Medicare rates across studies.
So, are younger Americans subsidizing Medicare in more ways than one? You betcha! However, there is a much more important issue.
What would happen to our health care system if all health care was paid for at Medicare rates? Before concluding we would all save money, let’s think this through.
Would some hospitals and other facilities be forced out of business?
Would lower reimbursements make the medical profession less desirable? Could that lead to shortages of doctors and other professionals?
Proponents of M4A base their anticipated saving projections on Medicare allowable fees. There are consequences.