fah hospital policy blog

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

Navigant Study Shows “One Size Fits All” Health Care Proposals Correlates with Hospital Cuts

March 18, 2019 | FAH Policy Blog Team

Category: Legislation, Medicare

Today, the consulting firm Navigant released a study showing that government-run health care proposals, like Medicare for All, would directly result in financial stress on hospitals. This comes on the heels of a study from FAH and AHA that found a Medicare public option could have a significant impact on patient access to care by leading to the largest ever cut to hospital funding – nearly $800 billion.

Navigant found that Medicare for All-style proposals could force hospitals to limit the care they provide, drive significant “layoffs” and “potentially force the closure of essential hospitals.” Navigant projected the impact on hospitals by using a hypothetical mid-sized regional hospital as the base for comparison. This sample hospital has 1,000 beds, a $1.2 billion annual revenue, and an operating margin of 2.3%.

Using that as a baseline, Navigant found that Medicare as a single-payer, also known as Medicare for All, has the most dramatic negative impact on hospitals, cutting operating margins to -22.1% and reducing revenues by approximately $330 million. The study found that a Medicare public option would cut the hospital’s revenues by approximately $157 million and reduce operating margins to -6.3%.

Additionally, Navigant asserted that continuing the status quo does not leave hospitals unharmed. The continued migration of baby boomers from the employer-based market into Medicare, along with other contributing factors, would also result in financial stress to hospitals. Navigant estimates that this would result in a reduction of $94 million in operating margin over a “period of years.”

MedPac reports hospital Medicare margins are already at a historic low of -11%. Navigant’s Jeff Leibach says any expansion of the program "would potentially accelerate those headwinds significantly.”

Navigant’s study comes just one week after FAH and AHA released a joint study that showed the devastating impact a Medicare public option proposal would have on hospitals and the health care system. FAH and AHA’s study found that the proposal would be the biggest cut to hospitals ever – an unprecedented $774 billion.

To see the full Navigant study click here. For FAH/AHA’s study click here.