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Health Policy
June 28, 2019

The Pricing of Care Under Medicare for All: Implications and Policy Choices

Author Affiliations
  • 1Department of Health Care Policy, Harvard Medical School, Boston, Massachusetts
  • 2Department of Medicine, Massachusetts General Hospital, Boston
JAMA. 2019;322(5):395-397. doi:10.1001/jama.2019.8245

The prices of health care services are a key consideration in the debate over “Medicare for all” and related single-payer proposals. The term prices refers to the allowed payment per unit of service. In the broadest versions of these reforms, in which commercial insurance plans would transition into a universal Medicare–like program, physicians and hospitals face the prospect of receiving Medicare prices for all patients they serve. Relative to the status quo, in which commercial insurer prices generally exceed Medicare prices, this price reduction could have important consequences for clinicians and patients.1,2

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    3 Comments for this article
    Something Even More Radical to Help Implement M4A
    Thomas Hilton, PhD | Retired NIH
    Being a retired career federal health services researcher - 32 years in the Navy, 12 more at NIH - I have worked with thousands of physicians and other healthcare providers who were either academic researchers or federal employees. They were all salaried - either university or government employees - and they were all living comfortable, prosperous, happy lives.

    M4A might cost less than implementing Medicare billing caps and also improve the quality of life for the average healthcare provider working as salaried employees of the government. This would eliminate time wasted on billing activities
    that could be devoted to more personalized patient care. OPM, DOD, DOT, and VA all have salary systems in place for all healthcare providers, so like existing Medicare, we have a fully-functioning pay system in place.

    There does not seem to be a problem for M4A if a healthcare provider wished to remain in the private sector. They could offer concierge services paid by the wealthy directly or via their private insurance, over and above those patients' M4A taxes.
    Karl Stecher, M.D. | Retired - University and Later Private Practice
    $73 for an Evaluation and Management visit? It is difficult to know what the author means, as the code is not given. Say this is a one hour visit. Medicare pays $73. Overhead for a neurosurgeon is $170 per hour. My own family physician of 25 years had to drop me when I went on Medicare several years ago, as reimbursement was below his office overhead.

    If Medicare reimbursement were compared to a hypothetical "Gasicare" reimbursement would be 60 cents a gallon and the gas station owner would often have to play "Mother May
    I" with the central Gasicare authority in some cases to see if Gasicare would pay for such big procedures as a new tire or oil change.

    Medicare obstructionism of physicians who want care for their patients (kindly called gatekeeping) is about the same as private insurance. And a small horde of office personnel is necessary to volley for permission, adding to office expense. This would not only not change under Medicare for all but would likely increase as the government would try new ways to save money at the expense of good patient care.

    Medicare standard billing forms are more complex than private insurance forms. Medicare has the highest rate of rejection of claims of any insurer, meaning rebilling and time wasted. Imagine a rejection of your claim for emergency subdural hematoma surgery because the PIN number of the Emergency Physician who first saw the patient (and referred it to you) was missing.

    Many doctors see no Medicare patients as they cannot afford the financial loss. Many others limit the number they can see.

    Medicare isn't even paying doctors fairly now. How is this to change with "Medicare for all?"
    Whose Moral Hazard?
    Ole Thienhaus, MD, MBA | University of Arizona College of Medicine
    The author presents a refreshingly dispassionate analysis of the market dynamics likely to impact costs in a single payer (Medicare for all or M4A) model that retains the provider model of self-employed physicians. One issue I want to raise relates to the problem of moral hazard which the author lists under patient factors. I am not aware of convincing research showing much price elasticity among consumers of health care; just because health care is cheap or free, would people flock to emergency rooms or choose to sit in doctors’ offices? No, the issue is that in health care, utilization is largely supply-driven. The moral hazard derives from the fact that in the absence of financial constraints providers are likely to schedule more visits, order more tests, and hospitalize more frequently (discussed in a different context in the article). Remedies for all would be rigorous utilization review mechanisms, a patient co-pay (which is anathema to the M4A philosophy), or limiting the number of providers. This is presumably one reason why in Canada reimbursement is restricted to physicians -- a solution not practiceable and probably not desirable in the US.