Democrats across Georgia are once again talking up the idea of expanding Medicaid under Obamacare as the right medicine for low-income Georgians without insurance and for struggling rural hospitals.
Meanwhile, Sen. Bernie Sanders — the once and perhaps future presidential contender from Vermont — is still hawking his “Medicare for All” proposal to bring all Americans under the federal government’s tender wing.
The right way to think about the first proposal is as a step toward the second. Not only is adding more people to government-run health care surely just a stepping stone for those who would add everyone to government-run health care, but it also reveals one of the many flaws in their math.
Lack of insurance is certainly a huge problem both for the people who don’t have coverage and for health providers. Uninsured Georgians forgo routine health, leading to bigger health problems that are more expensive to treat. In both cases, physicians and hospitals are unlikely to recoup their cost of providing care to the uninsured. We should all agree on this much.
Providers lose about 73 cents on the dollar when they care for the uninsured. In places with high uninsured rates, that means huge losses for providers.
A problem with assuming Medicaid expansion will make providers solvent, however, is that they also lose money on those patients. The loss is smaller — about 14 cents on the dollar — but it’s still a loss. One of the reasons given for expanding the program is more people will receive more care, so providers would be losing money on more patients.
Of course, it’s unclear how many patients would really receive more care. Estimates vary as to the percentage of doctors who accept new Medicaid patients. But this much is certain: Fewer doctors accept new patients with Medicaid (the low-income program) than new patients with Medicare (the program for seniors), and the new patients with the best chance of getting an appointment are those with private insurance. Why? Because it actually reimburses them above the cost of care, subsidizing the other patients.
All of that points to the need to get more people in private plans, not government-run plans. Private plans are better for patients and for providers – and if doctors and hospitals weren’t losing so much money on those with public plans or no insurance, private plans could be expected to decrease in price.
Yet, under a “Medicare for All” scheme, we’d be removing people from private plans. If you think low public reimbursement rates are a problem now, wait until you see what single-payer would do.
A recent study by Charles Blahous of George Mason University’s Mercatus Center found Sanders’ proposal would increase federal spending by about $32 trillion – yes, trillion with a “T” – over 10 years. His estimate is in line with estimates from liberal scholars.
Blahous also finds the bill most likely would be even higher. In reaching his estimate, he gave the benefit of the doubt to Sanders’ claim to be able to cut reimbursement rates to providers. Covering the uninsured most likely would spur them to consume more health care, an estimated 11 percent rise in personal health-care spending overall. But Sanders also assumes a 9-10 percent cut in what doctors and hospitals are paid for all that care.
In short, Sanders’ plan requires doctors and hospitals to care for many more people, for virtually the same amount of money they are paid today.
This notion defies everything we know about human behavior. While the government might have the power to force doctors to provide care for a certain price, it can’t force people to become doctors. Nor can it force hospitals to stay open when they go from losing money on some people and making money on others, to losing money on everyone.
Kyle Wingfield is president and CEO of the Georgia Public Policy Foundation. Contact him at email@example.com.