Medicare for All big hit with pols — but not Mass. hospitals

MEDICARE FOR ALL, which has gained traction among Democrats in Congress and some of the party’s presidential contenders, is often described as a way to guarantee health coverage to all Americans through a single government program that takes private insurance companies, dismissed by proponents as wasteful “middlemen,” out of the picture. Insurance companies would surely be big losers under a single-payer system. Far less well-appreciated is the enormous impact such a shift would have on health care providers.

When it comes to Massachusetts hospitals, Medicare for All would be very tough medicine for some.

At the top of that list: Many of the state’s most prestigious medical centers, including Harvard-affiliated Mass. General and Brigham and Women’s hospitals, which probably have the most to lose under a federal single-payer system.

In an article earlier this month in the American Medical Association journal JAMA, Stanford researchers Kevin Schulman and Arnold Milstein estimated that a Medicare for All plan would lead to a 15.9 percent decline in payments to US hospitals, or an annual reduction of $151 billion in hospital revenue.

“Health care’s a fifth of the US economy, and the most extreme forms of this would impact the entirety of that,” Schulman said of the various Medicare for All proposals in an interview this week.

Against that backdrop, the state’s hospitals, which have largely stayed quiet on the Medicare for All issue, are wading into the fray, declaring their opposition to a proposal that has become a hot topic in domestic policy discussions.

“As the Massachusetts Health & Hospital Association and its member hospitals and health care systems continue to work with policymakers to improve affordability and enhance high-quality patient care, we strongly support the tenets of universal health care coverage and maintaining a robust system of patient access,” Steve Walsh, the hospital association’s president and CEO, said in a statement. “However, we are opposed to ‘Medicare for All,’ as it could endanger the collective success we have achieved in Massachusetts and inhibit access and harm health care quality across the country.”

The position puts the hospital association at odds with the state’s two US senators and six of the state’s nine House members, who have signed on as cosponsors of Medicare for All bills, and it underscores the fierce resistance single-payer proposals will face nationally from big interests in the country’s health care sector.

Walsh, in his statement, said more needs to be done to improve on the gains made through the Affordable Care Act, but cautioned that a single-payer system under Medicare could lead to an “underfunded program,” creating a two-tiered system in which better-off Americans would be able to supplement their coverage with private coverage, while lower- and middle-income patients “struggle with limited coverage.”

But hospital bottom lines would also struggle mightily.

Hospital opposition to Medicare for All, say Schulman and Milstein, is rooted in the disparity between prices paid by private insurers providing employment-based coverage and public payers — the Medicare program that covers older Americans and Medicaid, which provides coverage to low-income residents and the disabled. While the public coverage programs pay fixed rates, hospitals negotiate rates with private insurance companies, which end up paying much higher rates for the same services.

According to Schulman and Milstein, Medicare and Medicaid pay US hospitals, on average, about 87 percent and 88 percent, respectively, of the average cost of care. Private payers, meanwhile, pay about 145 percent of actual hospital costs, rates that act as a cross-subsidy to make up for the losses from the public payer systems.

A sudden shift to Medicare rates for all patients would send convulsions throughout the health care sector, but the impact would be greatest on facilities like Partners HealthCare’s Mass. General and Brigham and Women’s hospitals, which currently enjoy very high reimbursements from private insurers.

“Boston, no question about it, would be hard it,” said Stuart Altman, chairman of the state Health Policy Commission, which was created by 2012 legislation aimed at restraining the growth of health care costs.

In characterizing the US hospitals that would be most affected by a Medicare for All system, Schulman and Milstein could be writing about the growth strategy that Partners has followed since it was formed in 1994. “Hospitals that had previously pursued an aggressive market consolidation strategy to increase leverage in price negotiations with private insurers (with consequent relaxed pressure to provide care at the Medicare-efficient level of cost) may be the most challenged,” they write.

“If you think private insurers are the greatest enemies of single-payer, right behind them are our providers — not necessarily all of them, but our larger systems like Partners, which depend on getting well paid by the private insurers to make up for payments under Medicare and Medicaid,” said Paul Hattis, associate professor of public health and community medicine at Tufts University School of Medicine.

Partners , the state’s largest provider system, declined to make an official available to talk about the Medicare for All issue, instead issuing a statement pledging support for the Affordable Care Act, Medicare, and Medicaid and saying the hospital network is “working closely with both the American Hospital Association and the Massachusetts Hospital Association to evaluate various proposals at the federal level and the impact that they could have on patients at Partners and across Massachusetts.”

Massachusetts health care providers and insurers have strongly backed efforts over the years to expand coverage, but Medicare for All vows to do that while driving down costs, a challenge that has befuddled policy makers here, as elsewhere. “Massachusetts has always been for coverage,” said Nancy Kane, a professor of management at the Harvard Chan School of Public Health. “We have been battling out cost control for as long as I’ve been involved, which is 40 years.”

While the state hospital association has staked out ground against Medicare for All, not all hospital leaders in the state are rejecting the concept out of hand.

Dr. Eric Dickson, president and CEO of UMass Memorial Health Care in Worcester, said such a system would be one way of ensuring universal coverage and evening the playing field between hospitals that are drawing generous private insurance payments and those relying on lower public rates.

“Now with Partners and Beth Israel-Lahey,” Dickson said, referring to the newly merged Beth Israel Deaconess Medical Center and Lahey Health, “you’re going to have two health care systems that care for about 40 percent of the patients across the state but collect about 60 percent of the revenue.” He said he fears that providers like UMass, whose share of patients on Medicaid is about double that of the big Boston systems, “are just going to get crushed” if no changes are made.

Unlike some of the Boston hospitals that would take a huge hit under a Medicare for All plan, Dickson said it would probably be a wash financially for UMass. In contrast to the average national figures Schulman and Milstein cite, Massachusetts providers tend to be paid less for Medicaid patients than Medicare patients. If Medicaid rates at UMass were raised to Medicare levels and private insurance rates were lowered to that level, “we’d be in close to the same financial positon we’re in today,” he said.

Dickson acknowledged that a sudden shift to Medicare for All would be very disruptive to other hospitals, and he said perhaps a more gradual “glide path” that makes that transition over time makes more sense.

“It’s all in the details,” he said. But Dickson called the Medicare for All discussion “a great conversation to be having. I’m not ready to say I’d vote for it, but I’m not against it.”

John McDonough, a professor at the Harvard Chan School of Public Health, said opposition to Medicare for All from the Mass. Hospital Association was no shock.

“I’m not surprised,” he said. “The biggest funders of MHA are the bigger health/hospital systems that are the biggest beneficiaries of higher commercial rates. This is reflective of the predictable stance of the broader US hospital world.”

Indeed, national hospital organizations launched an effort last year, together with pharmaceutical companies and insurance firms, to fight Medicare for All proposals. Partnership for America’s Health Care Future has been sponsoring online ads and working to push down popularity of the Medicare for All concept.

One target the group recently put in its sights: Rep. Lori Trahan, the newly-elected Massachusetts congresswoman, who has been hit with online ads attacking her for cosponsoring Medicare for All legislation. The ads suggest she has flipped on vows during her campaign last year to focus on improving the Affordable Care Act.

Trahan pushed back against the ad campaign, and suggested she won’t back away from her Medicare for All support.

“I would like to thank the Partnership For America’s Health Care Future for highlighting my commitment to protecting the Affordable Care Act from efforts by the current Administration to sabotage it, jeopardizing millions of Americans with preexisting conditions,” Trahan said in a statement released by her office. “I believe that the overwhelming popularity and success of the Medicare program demonstrates that it should serve as a north star for our reform efforts. My support for this does not negate the fact that right now there’s work to be done to stabilize our health care system that has been under constant attack for the last two years. Some digital ads on Facebook are not going to distract me from that important work.”

The Mass. Hospital Association is not part of the Partnership for America’s Health Care Future consortium.

US Rep. Joseph Kennedy, another Massachusetts cosponsor of the recently filed Medicare for All bill in the House, has chalked up his support to growing frustration with the slow pace of change in health care. Speaking earlier this month on Politico’s health care podcast “Pulse Check,” Kennedy reflected on the fact that his great-uncle, Ted Kennedy, first filed a single-payer bill in the US Senate in 1971. “We’ve had 50 years of trying to tweak and address this market and we still haven’t gotten there,” he said. “You have to give a wholehearted reexamination to these structures and payment systems.”

Asked whether a single-payer plan would hurt entities like Partners, Kennedy seemed to downplay what many say is an inherent tension between Medicare for All and well-paid hospitals. Kennedy said Medicare reimbursement rates are ultimately left to the secretary of health and human services to negotiate. “So part of that’s going to depend on where the government reimbursement rate is actually set,” he said of single-payer’s effect on systems like Partners. He went on to say he’s spoken with a number of hospital leaders in the state who say they would support a single-payer system.

Paul Levy, the former president of Beth Israel Deaconess Medical Center, said there’s little reason to think a Medicare for All plan won’t push down hard on prices. “The political hydraulic for national health plans in general is downward pressure on payments to hospitals,” he said.

McDonough, who helped craft the state’s expanded coverage law in 2006 and Affordable Care Act that was modeled on it, said the current health care discussion has often conflated issues involving coverage and payment. “People assume universal coverage and single payer are synonymous and it’s not true,” he said.

He said that confusion is underscored by a recent Kaiser Family Foundation poll that asked about health care proposals using different phrasing. Medicare for All had the support of 62 percent of Americans compared with only 48 percent support for a single payer system, which is the same thing.

“For a lot of people, their support for Medicare for All represents deep disgust with deep flaws and inadequacies of the US health care system,” he said, “and a far less sophisticated, thoughtful consideration of all the impacts that a structure like single payer would have on the system, both good or bad, depending on your point of view.”

“Single payer is one pathway to universal coverage, but there are others,” said McDonough, pointing to countries like Germany and Switzerland that achieved universal coverage through a mix of public and private insurance.

Even some of the congressional cosponsors of Medicare for All legislation have offered differing views on what it should look like and whether there would still be a place for private insurance, something that the overall concept seems to preclude.

“I think the conversation’s really important to have,” said Kate Walsh, president and CEO of Boston Medical Center health system. “But I really call it a slogan, not a law,” she said of Medicare for All. “We need to have a more practical conversation about how to provide access to high-quality health care for all Americans at a price we can afford as a nation.”