A transition to Medicare for All would mean significant pay cuts for most doctors and health care providers — and could have some unintended consequences, according to a recent analysis in the Journal of the American Medical Association by Harvard's Dr. Zirui Song.
Using data from Song’s analysis, Axios illustrated just how steep the cuts might be, even if reimbursement rates are set well above current Medicare rates. Note that the figures below show the change in doctor pay compared to patients now covered by private insurance, not all patients. Private insurance typically reimburses providers at significantly higher rates than Medicare or Medicaid.
The pay cuts for doctors and hospitals are a key element of Medicare for All, and one of the main ways proponents of a switch aim to bring down health care costs overall. But Song warns that the cuts could have some dramatic implications.
“Reducing commercial prices to the level of Medicare prices would, at first glance and without any adjustment, substantially reduce the total cost of health care in the United States through lower total revenues for physicians and hospitals,” he writes in the JAMA analysis. “However, the assumption that physicians and hospitals would not react as their commercial prices are reduced substantially to Medicare levels is likely unrealistic.”
Song says that doctors may respond in a number of ways, such as by increasing the number of procedures they perform; changing the mix of services they deliver or the patient populations they see; changing their billing and coding to try to get paid more; and consolidating further into hospitals (because services delivered in a hospital setting get reimbursed more).
These potential behavioral changes, Song says, should be a caution sign to those advocating a switch to Medicare for All “because eventual savings in the health care system could be smaller than anticipated and changes to care patterns could be larger than anticipated.”
Song argues that it’s worth considering setting “less draconian” prices under Medicare for All to ease any transition and get doctors and hospitals to buy into the change.