Fact Check: Does The Public Option Pose a Major Threat to Quality and Accessibility of Healthcare in Colorado?

September 6, 2019 / Fowler Tribune
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A recent newspaper column in Southern Colorado warns that the so-called public option “would cripple the private insurance market, drive doctors and hospitals out of business, and make it harder for patients to access care.”

CLAIM: Public option proposals don’t pay healthcare providers enough to cover the costs associated with treating patients, according to a Fowler Tribune column from Sally Pipes, the president, chief executive officer and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute.

FACT: This is true. State and federal public option proposals would create a new government-run health plan that reimburses physicians, nurses, hospitals and other healthcare providers at Medicare or Medicaid rates. For example, a national public option proposal called Medicare-X would cap reimbursement rates at the same level as Medicare or, in limited cases, 25 percent above Medicare rates. Another public option proposal, pushed by advocacy groups like the Colorado Consumer Health Initiative, would reimburse healthcare providers at Medicaid rates.

But Medicare and Medicaid are safety net programs that do not cover the full cost of care. In Colorado, these programs only pay 69 cents for every $1 of care provided by hospitals, for example.

Two recent studies have highlighted what the public option concept would mean in reality for hospitals, physicians, nurses and their patients:

  • A study conducted by Navigant Consulting determined the public option would threaten as many as 13 rural hospitals in Colorado with closure, because of the proposals below-cost reimbursement rates. Nationally, the impact of a public option could force the closure of more than 1,000 rural hospitals – that’s more than half of the rural hospitals currently treating patients today.

“The availability of a public option could negatively impact access to and quality of care through rural hospitals’ potential elimination of services and reduction of clinical and administrative staff, as well as damage the economic foundation of the communities these hospitals serve,” concluded the study, which was commissioned by a coalition of employer groups, chambers of commerce and stakeholders from the healthcare sector.

  • A study conducted by KNG Health Consulting found the public option would cut reimbursements to hospitals by $774 billion nationwide. The report, commissioned by the American Hospital Association and the Federation of American Hospitals, found that expanding below-cost reimbursement beyond Medicare and Medicaid would “compound financial stresses already faced by the sector, potentially impacting access to care and provider quality.” The report also found that the public option would draw 90% of enrollees from the non-group and employer-provided insurance market, not the ranks of the uninsured. This is critically important because higher reimbursement rates from non-group and employer-provided insurance plans currently support the ability of hospitals and other healthcare providers to provide below-cost care to Medicare and Medicaid patients.

Improving access to care and quality of care are goals that everyone shares in the healthcare policy debate. But it’s clear the public option would threaten both access and quality, however well-intentioned it may be. Imposing huge budget cuts on the people who actually treat patients will not produce the choice and competition that’s needed to put downward pressure on the cost of health coverage in Colorado – it will result in less choice and competition, along with lower quality of care.