By ASEEM R. SHUKLA, MD
The impending closure of Hahnemann University Hospital is a local tragedy. Eliminating a 170-year old institution is certain to exaggerate the daily travails of the economically disadvantaged inner-city population that Hahnemann serves as a safety-net hospital. The closure is also a national tragedy. Hospitals are the towering, visible monuments of our healthcare system, and closings imply that something insidious ails that very system—that all is not well.
Hospitals are complex entities with varied financial drivers, and the solution is never simple. And the moment is too rich for politicians who see Hahnemann’s failure as the culmination of their dystopian predictions. Bernie Sanders, most prominently, stood on the hospital’s doorstep and pitched his deceptively simple solution—Medicare for All. Medicare for All, Sanders said, would ensure that every patient carries the same coverage, hospitals are paid a predictable rate, and voila, no hospitals need to close. Private insurance would disappear, and no one would be without coverage.
Even physicians have jumped on the Medicare for All bandwagon. Some doctors insist that once profit is removed as a motive for hospital bottom lines, and government bodies decide which hospitals can buy a surgical robot, build a new wing or offer proton beam treatment cancer treatment centers, then all hospitals will do better.
But these arguments miss a fundamental point: why pitch government insurance for all, like Medicare and Medicaid (a federal and state insurance plan to cover low income adult and children) as a remedy, when it is precisely government-run insurance that is killing Hahnemann and other hospitals in distress?
Consider: Medicaid reimburses, on average, about 50% of Medicare rates, while private insurance reimburses up to 200% of Medicare rates. It is private insurance that keeps hospitals solvent through cost-shifting—charging private insurance more for the same procedure or hospitalization than what Medicare or Medicaid will pay.
Of the patients treated at nearly every major hospital in our region that operated at a loss last year, more than 60% carried either Medicare or Medicaid. Conversely, those hospitals treating the same percentage of patients with private insurance, thrived.
Bernie Sanders will argue that his Medicare for All proposal will remedy inequality by raising Medicaid reimbursements to Medicare levels—an increase of nearly 50% in many cases. So since the nearly 30% of patients treated at Hahnemann carrying Medicaid would now deliver Medicare rates to the hospital’s bottom line, Hahnemann would stand to benefit significantly.
The reality, however, is that a scenario in which all patients carried Medicare and hospitals could not cost-shift to the much higher reimbursements of private insurance, would be unsustainable. The cost of Medicare for All is now well-known—even the left-leaning Urban Institute estimates the cost at nearly $40 trillion over a decade. Sanders’ tax increase proposals to pay for his plan, if implemented in their politically impossible entirety, would reconcile not even 50% of those costs. And if Sanders tried to sweeten Medicare reimbursements to 111% of Medicare—better, but nowhere close to what hospitals say they need to remain open—the total cost shoots up stratospherically—another 1.5% of G.D.P.
For all of the criticism of Medicare for All, it is telling that the Trump Administration offers no alternative to sustain hospitals while extending health insurance to all Americans. Only Vice President Joe Biden’s proposal would preserve Obamacare’s vision of a private insurance market even as Medicaid is extended to more lower income people. His plan is not a panacea, but seems to be the only one that is rooted in preserving and corroborating what works in American healthcare. Hospitals are not exempt from the blame and for powerful lobbying to fight the public option, global payments and increasing costs that keep insurance premiums on the ascendant. Nor do insurance providers acquit themselves well in this debate with rising overhead costs, executive compensation packages and the daily torture they subject providers to in obtaining clearances. But the simple argument that Medicare for All will salve these ills is a reductive fallacy.
The consequence of the status quo is manifest in Hahnemann’s fate. But Hahnemann is also the canary in the coal mine foretelling what Medicare for All would reap in a world bereft of cost-shifting alternatives. Our community needs Hahnemann; pushing to “Go Big and Go Bold” while standing on the hospital’s deathbed? Not so much.
Aseem Shukla, M.D. is Associate Professor of Surgery (Urology) at the Perelman School of Medicine at the University of Pennsylvania. He tweets at @aseemrshukla.