Date of Award
Master of Public Health (MPH)
School of Public Health
Background: High health care costs have led to an unprecedented number of policy proposals to reform the United States health care system. Proponents of Medicare For All (M4A) argue that a single-payer system would reduce costs by allowing the government to obtain better prices from providers. M4A would have varying effects on sources of hospital revenue, increasing some payment while decreasing others. This paper explores the differential effects of M4A on hospital income.
Methods: This paper uses data from CMS’s Healthcare Cost Report Information System (HCRIS) to create a baseline model reflecting hospital revenues and costs under current hospital payment policy. Then, estimates from the literature are used to inform parameter of a counterfactual model of hospital finances under M4A. Changes in hospital finances reflect changes in costs associated with a simplified billing system, while changes in revenue arise from using Medicare payment rates for patients covered by Medicaid, CHIP, commercial insurance, and uninsured patients under current hospital payment policy.
Results: Under the M4A counterfactual, 33% of hospitals have positive net income from services to patients, compared to the 38% with positive net income in the baseline model. Using a multiple linear regression to analyze factors associates with change in hospital revenue, this analysis finds that rural hospitals experience a 2.7% reduction in revenue under the counterfactual while critical access hospitals experience a 31.6% increase. For-profit hospital ownership is associated with an increase in revenue of 3.3% and government-owned hospitals see an increase in revenue of 12.3% from the counterfactual policy. Finally, being a teaching hospital is associated with a 4% increase in revenue.
Conclusion: This exercise finds that a single-payer system would have drastically different effects on hospitals across the nation. While many hospitals would lose money, quite a few would also earn more money. This contrasts with dire warnings about M4A being catastrophic for hospital net income.
Sussman, Leah, "You Win Some, You Lose Some: An Analysis Of Medicare For All’s Differential Impact On Hospital Finances" (2020). Public Health Theses. 1999.