By taking advantage of lower provider payment rates, Medicare buy-in can increase the value of coverage and reduce out-of-pocket spending for beneficiaries, particularly individuals who do not qualify for premium tax credits. With modest additional federal spending, buy-in policies also can save on national health spending.
That’s the conclusion of the Urban Institute, a Washington, D.C.-based think tank that released a brief on Feb. 2 detailing what Medicare buy-in policies potentially can accomplish when implemented alongside the Affordable Care Act.
Look at the first sentence quoted above and then read the data below. Do you think millions of Americans, Americans with higher than average health care costs, can be given the option to enroll in a plan that reimburses health care providers far less than current rates without adverse consequences?
- Private insurers paid nearly double Medicare rates for all hospital services (199% of Medicare rates, on average), ranging from 141% to 259% of Medicare rates across the reviewed studies.
- The difference between private and Medicare rates was greater for outpatient than inpatient hospital services, which averaged 264% and 189% of Medicare rates overall, respectively.
- For physician services, private insurance paid 143% of Medicare rates, on average, ranging from 118% to 179% of Medicare rates across studies.
Source: Kaiser Family Foundation
What we are talking about is expanded health care reimbursement based on government established fees. Fees that will require providers to raise fees for the private sector or increase services provided to maintain revenue levels. Who will pay those higher fees? Mostly employers … and their employees.
What could possibly happen if hospitals see a significant portion of their revenue cut in half?
We are talking about adverse selection where the sickest will select the option that is in their best interest at lowest possible cost.
Choice when it comes to health care coverage never works out well.