5 ms·

" it just pays below its share of the fixed costs and lets private insurance pick up the difference." Is that actually true? I always hear that line but nobody

" it just pays below its share of the fixed costs and lets private insurance pick up the difference." Is that actually true? I always hear that line but nobody every backs it up with data. If Medicare is losing money for hospitals why do they still take it?

ikeboy 8y ago
There are citations in the Mercatus paper to government data showing this. Medicare generally pays below cost. > If Medicare is losing money for hospitals why do they still take it? Many have stopped. The ones that do presumably are getting paid above marginal cost, but that doesn't mean they're getting paid above average total cost.
AnthonyMouse 8y ago
> Is that actually true? I always hear that line but nobody every backs it up with data. If Medicare is losing money for hospitals why do they still take it? Fixed costs vs. variable costs. It costs a million dollars to have a hospital, then there is a further $250 marginal cost to treat another patient. If there are 2000 patients then the average patient has to be charged $750 ($250 + $1M/2000) to cover costs. If Medicare says $500 or GFTO then $500 is more than $250 and they "make" $250 by accepting Medicare, but if they received that much from the average patient they wouldn't cover their costs.
- maxxxxx 8y ago
  At a minimum a lot of money would be saved by standardized billing practices and costs. If Medicare pays too little then reimbursement could be adjusted. It would lead to more transparency and less bureaucracy. I think that’s how it works in Germany. There are different insurers but they operate on a set of standards. It’s nuts that in the US every insurance negotiates separately with each provider. It’s extremely inefficient and also makes it basically impossible for the patient to do any price shopping.
  - testpostpls 8y ago
    Germany saves money by paying doctors $70k/yr. There isn’t a clever, low-impact policy shift that’ll save a ton of money in the US. Something really big has to give.
    - maxxxxx 8y ago
      I grew up there and the doctors I knew had very nice houses and cars. Maybe they were not as rich as of US doctors but certainly pretty well paid.
    - acdha 8y ago
      Do you have a citation for that? The sources I found suggest that’s the starting salary and it goes up considerably.
      - testpostpls 8y ago
        Some doctors are paid that little in Germany. Here’s an comparative analysis on 2008 data: average net outflows to physicians are higher, but it seems like US physicians may be receiving a substantially larger slice of the budgetary pie https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2010.0204 https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2010....
        acdha 8y ago
        That shows MDs making almost twice what you claimed ($130k vs. $70k). Not as high as Americans but that seems insufficient to explain the huge cost differential.
    - marchenko 8y ago
      German doctors have much lower school debt and relatively lower tort exposure. Salaries in Germany are significantly lower across the board, so German physicians enjoy similar financial positioning relative to other professionals, and high social status. Any attempt to reduce physician salaries in the US is going to have to also address medical school debt and physician insurance requirements & administrative overhead.
refurb 8y ago
This is both for both Medicare and Medicaid (which is notorious for underpaying)[1]: In 2015, $58.7 billion in Medicaid and Medicare reimbursement shortfalls and high uncompensated care costs affected hospital revenue cycles, the AHA found. [1]https://revcycleintelligence.com/news/medicaid-medicare-reimbursement-57.8b-below-hospital-costs https://revcycleintelligence.com/news/medicaid-medicare-reim...
- maxxxxx 8y ago
  So let’s raise rates by these 58.7 billion so hospitals don’t lose money. That’s small change compared to how much the country spends on medical.
  - refurb 8y ago
    OK, then that $2T saved in the first decade ($200B per year), get significantly lowered, if the number is to be believed at all.

ikeboy 8y ago

There are citations in the Mercatus paper to government data showing this. Medicare generally pays below cost. > If Medicare is losing money for hospitals why do they still take it? Many have stopped. The ones that do presumably are getting paid above marginal cost, but that doesn't mean they're getting paid above average total cost.

AnthonyMouse 8y ago

> Is that actually true? I always hear that line but nobody every backs it up with data. If Medicare is losing money for hospitals why do they still take it? Fixed costs vs. variable costs. It costs a million dollars to have a hospital, then there is a further $250 marginal cost to treat another patient. If there are 2000 patients then the average patient has to be charged $750 ($250 + $1M/2000) to cover costs. If Medicare says $500 or GFTO then $500 is more than $250 and they "make" $250 by accepting Medicare, but if they received that much from the average patient they wouldn't cover their costs.

maxxxxx 8y ago
At a minimum a lot of money would be saved by standardized billing practices and costs. If Medicare pays too little then reimbursement could be adjusted. It would lead to more transparency and less bureaucracy. I think that’s how it works in Germany. There are different insurers but they operate on a set of standards. It’s nuts that in the US every insurance negotiates separately with each provider. It’s extremely inefficient and also makes it basically impossible for the patient to do any price shopping.
- testpostpls 8y ago
  Germany saves money by paying doctors $70k/yr. There isn’t a clever, low-impact policy shift that’ll save a ton of money in the US. Something really big has to give.
  - maxxxxx 8y ago
    I grew up there and the doctors I knew had very nice houses and cars. Maybe they were not as rich as of US doctors but certainly pretty well paid.
  - acdha 8y ago
    Do you have a citation for that? The sources I found suggest that’s the starting salary and it goes up considerably.
    - testpostpls 8y ago
      Some doctors are paid that little in Germany. Here’s an comparative analysis on 2008 data: average net outflows to physicians are higher, but it seems like US physicians may be receiving a substantially larger slice of the budgetary pie https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2010.0204 https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2010....
      - acdha 8y ago
        That shows MDs making almost twice what you claimed ($130k vs. $70k). Not as high as Americans but that seems insufficient to explain the huge cost differential.
  - marchenko 8y ago
    German doctors have much lower school debt and relatively lower tort exposure. Salaries in Germany are significantly lower across the board, so German physicians enjoy similar financial positioning relative to other professionals, and high social status. Any attempt to reduce physician salaries in the US is going to have to also address medical school debt and physician insurance requirements & administrative overhead.

refurb 8y ago

This is both for both Medicare and Medicaid (which is notorious for underpaying)[1]: In 2015, $58.7 billion in Medicaid and Medicare reimbursement shortfalls and high uncompensated care costs affected hospital revenue cycles, the AHA found. [1]https://revcycleintelligence.com/news/medicaid-medicare-reimbursement-57.8b-below-hospital-costs https://revcycleintelligence.com/news/medicaid-medicare-reim...

maxxxxx 8y ago
So let’s raise rates by these 58.7 billion so hospitals don’t lose money. That’s small change compared to how much the country spends on medical.
- refurb 8y ago
  OK, then that $2T saved in the first decade ($200B per year), get significantly lowered, if the number is to be believed at all.