fah hospital policy blog

Perspectives on health policy affecting America’s hospitals and the patients we serve.

FAH Leader Comments on RAND Study

May 10, 2019 | Chip Kahn

Category: General, Medicare, Publications, Research

"Medicare is no benchmark for value judging hospital payments. It is wrong to assume that Medicare, which pays hospitals 11% below cost, sets a standard that assures all patients access to the hospital care they deserve and expect.

"It is a fantasy to think that the hospital care will be there for all Americans without a financial balance between the Medicare and Medicaid underpayment for services, those patients who are uninsured and pay little or nothing and those with private coverage."

BACKGROUND:

• The authors of the RAND report acknowledge the study’s small sample size: less than 5% of people covered in about half of all states, and only 2% of the 181 million Americans with employer-sponsored health insurance. 

• Hospital Medicare margins will hit an all-time low in 2019 of negative 11% according to MedPAC’s most recent estimate.

• CBO estimates that between 40-50% of hospitals could have negative margins by 2025.

•Altarum's most recent (April 2019) Health Sector Economic Indicators report notes a "history making" ongoing stretch of economy-wide prices growing faster than health care prices and hospitals are leading the way. Hospital price growth fell to its lowest level – 1.6 percent - since September 2017, and private pay prices “fell sharply” to 1.7 percent.