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What If All Your Reimbursement Was Medicare?

Philip Betbeze, for HealthLeaders Media, November 6, 2009

Further refinements of the bills in both houses revealed that the public option would have to negotiate rates with hospitals in a similar way that commercial plans do now. Fine. But nothing in the intervening time period has spelled out at what level the public plan might think is a fair reimbursement. Never mind the difficulties of negotiating with a payer that can effectively put you out of business, or, at the very least, make life very difficult for those who don't like what the government plan is offering.

So back to the question I asked in my headline. What if all your reimbursement came from Medicare? I'm guessing you wouldn't like it very much, considering that all I've heard over the years is how Medicare significantly underfunds the cost of care in its reimbursements, leaving hospitals to cross-subsidize by negotiating deals with commercial insurers that pay better. That's a hidden tax that we all currently pay for the fact that government reimburses poorly.

But if healthcare reform passes, and even if the public option pays you as much as 99% of costs, much higher than Medicare, you still come out way behind over time. And that was the crux of my friend's point.

And don't count on commercial insurers to continue making up the difference. Why should they? They haven't made a deal with the president, after all.

Philip Betbeze is a senior leadership editor with HealthLeaders Media. He can be reached at pbetbeze@healthleadersmedia.com.
4 comments on "What If All Your Reimbursement Was Medicare?"


Bob Coli, MD (11/11/2009 at 11:49 AM)
The major suppliers of healthcare services and products seem to be ignoring the question posed by Mr. Betbeze.

The commercial health insurance monopolies (and oligopolies) already cover 177 million employed Americans and their dependents. The Medicare and Medicaid monopsonies (?buyer monopolies?) already cover 96 million elderly and poor Americans. Its supporters clearly intend the third, government-run ?public option? monopsony to ultimately cover the rest of the U.S. population of 305 million.

Yet, with an irony beyond the capacity of a skilled writer to invent, the AHA, the AMA, eleven national physician specialty organizations, the MGMA and drugmakers are publicly supporting passage of the public option, while the AHIP is lobbying to block its passage.

Since the sellers of healthcare services and products are already familiar with the adverse pricing and regulatory effects of such massive market concentration, how can they believe that public option reimbursement rates will not mirror the historically low levels of Medicare and Medicaid reimbursement rates?

One thing is certain. By further expanding and consolidating government-run monopsony power to the entire population, a successful public option will ensure that the purchasers of healthcare services and products will never enjoy the price, quality and access benefits of a consumer-centered, value-driven competitive market.

It would be interesting to know if the sellers of healthcare services and products believe that continuing to negotiate reimbursement deals with the powerful federal government and commercial insurers is really a better way to protect their interests than operating in the alternative pro-consumer, competitive marketplace.



Gary (11/9/2009 at 1:26 PM)
First of all, to this point the majority of the discussion (and rhetoric) has not been about 'healthCARE reform', its been about health 'insurance' reform - which is what this bill this bill is primarily about - and if this bill passes, the net result will be very good for insurance companies and the pharmaceutical industries - and most hospitals will also have some gains (increased volume) as all of these entities will generate revenue from the previously uninsured (thanks again US taxpayer).
For the record there are a number of hospitals who are happy with Medicare (compared with Medicare replacement HMOs) and whose existence depends on Medicare... as for the perpetual lobbying and horse-trading for Medicare reimbursements, its is as old as the program itself.
Is this bill better than nothing? quite possibly, but until we COLLECTIVELY take dramatic steps to REALLY reform healthCARE in this country, we're simply nibbling at the edges of a failing and grossly over-expensive system.

Ken (11/9/2009 at 10:05 AM)
All providers negotiate with Medicare now. Take it or leave it. Any indication the new plan will be any different?

The public option will be a boon to politicians, just like the sustained growth rate has been. Every two years , when it is election time, there will be money poured into lobbying firms and politicians to change or improve the payment system in some fashion. This enables them to get reelected because they can usually get a lot more money than the challenger to ?get their message out? like ?I saved the public option, again, for all my constituents?.

If doctors and hospitals and others in healthcare want to regain their autonomy they need to get out of the game. Just do not play it to the point politicians come begging to them for help rather the other way around. It will be painful initially. It could be dangerous because politicians are law writers and might retaliate at their loss of power by making the delivery of healthcare, out of the government option, illegal. There is a real game of chicken for you!

I keep wondering where is the lobby for the government to do less, take less, and leave us to our personal business?? But then that would be playing the game, not being outside it.