Doctors, hospitals take up arms against Democrats' health care changes
The debate over various "Medicare for All" plans has gripped the presidential primary contest.Supporters of Medicare for All are trying to squeeze cost reductions out of the health care industry, but physicians and hospitals may get pricked by lower payments. Mike Ellis / for NBC News
By Benjy Sarlin
WASHINGTON — Across months of debates, stump speeches, TV appearances and position papers, the face of everything wrong with the U.S. health care industry for Democratic candidates has mostly come down to two groups: private insurers and pharmaceutical companies.
But in focusing on those two industries, candidates may be leaving supporters unprepared for the fight it would take to pass Medicare for All or create a new public insurance option. In fact, Democratic proposals already face opposition from well-funded groups representing doctors, specialists and hospitals, many of which would be asked to accept major revenue cuts to finance expanded coverage.
While Democrats are comfortable attacking bureaucrats, CEOs and Big Pharma, public campaigns to block legislation are likely to include more sympathetic figures from voters' own communities like Dr. Asim Shah, executive vice chair and professor of psychiatry at Baylor College of Medicine.
Shah, who oversees about 90 staff at a trauma center in Houston and is known locally for his work treating Hurricane Harvey survivors, co-wrote an op-ed in the Houston Chronicle last month warning of "the perils of dismantling the existing structures and moving directly to a government-run plan."
Shah told NBC News that he's not ideologically opposed to a government-led approach, but he's concerned with a simple reality: Medicare pays providers less than private insurance and almost every 2020 Democratic plan looks to bring down soaring costs by tying more coverage to Medicare.
"Their reimbursement rates are not high," he said. "That's the reason some are scared."
The gap is especially large at hospitals, where a RAND analysis found private insurers pay more than twice as much on average for similar care.
Sen. Elizabeth Warren's much-anticipated Medicare for All plananticipates lowering health care spending by trillions of dollars by moving physicians to Medicare rates, reimbursing hospitals at an average 110 percent of Medicare rates, and instituting reforms that would cap the growth of health care costs moving forward.
Single-payer advocates argue doing away with private insurance would reduce administrative burdens for doctors and hospitals, meaning they would be able to treat more patients for less. The U.S. is a major outlier among developed countries when it comes to its high health care costs, and some outside analyses of Medicare for All proposals suggest it could produce significant savings by negotiating lower prices and cutting overhead.
Donald Berwick, who oversaw Medicare and Medicaid under President Barack Obama and consulted on Warren's plan, said her reimbursement rates were calculated to cover current operating margins for hospitals, but would make it harder for them to bargain for higher rates in the future.
"It's definitely stringent, and it would really require hospitals to look very carefully inside for efficiencies, but they should be doing that anyway," Berwick said.
Rival approaches short of Warren and Sen. Bernie Sanders’ Medicare for All proposals would also require new savings from health care providers.
Many candidates are proposing a public insurance option that pays some variation on Medicare rates in part to pressure private insurers to compete with lower premiums and spur providers to lower their prices. South Bend, Ind., Mayor Pete Buttigieg has proposed limiting how much hospitals can charge private insurers relative to Medicare.
In a preview of the fight, Congress is currently struggling to advance legislation to address the sometimes shockingly high and confusing out-of-network hospital bills that patients receive — a much less daunting issue with bipartisan interest, including from the White House — amid an onslaught of outside spending.
A new group called Doctor Patient Unity popped up in July and spent over $28 million on ads opposing it through the summer, more than Warren's presidential campaign raised in the last quarter. Its funders were initially unclear, but The New York Times revealed they were private-equity companies invested in health care.
Industry groups opposing Medicare for All are making the case that they need higher private insurance rates to make up for lower government ones and that customers will suffer from any reductions. The American Hospital Association decried Warren's proposal, arguing "hospitals are already paid far less than the cost of caring for Medicare patients" and that further cuts "could threaten access to care and hospitals' survival."
Partnership for America's Health Care Future, an umbrella group of health care trade groups that oppose single-payer health care or a public option, has commissioned outside studies raising concerns about the impact of lower reimbursement rates on hospitals struggling with revenue.
