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Warren, Sanders and Medicare for All. What's real? What's not?

Health care executives are pushing back against Medicare-for-all

Health care executives are pushing back against Medicare-for-all plans proposed by Sen. Bernie Sanders (I-Vt.) and Sen. Elizabeth Warren (D-Mass.). Credit: AP / Paul Sancya

Medicare-for-all advocates, including two top Democratic presidential candidates, have a powerful adversary: large regional health systems that employ tens of thousands of local workers. 

Sen. Elizabeth Warren of Massachusetts and Sen. Bernie Sanders of Vermont have proposed Medicare-for-all systems that could eliminate private health insurance and instead have the government take over paying for health care. 

Top executives at many health systems in the region said a shift to a so-called single-payer system that pays at the current rate of Medicare would lead to hospital closures, longer appointment wait times and a drastic cut in research and development funds.

“All you have to do is look at the hospitals that are in the most financial trouble to see they’re usually the ones that depend mostly on Medicaid or Medicare payments,” said Kevin Dahill, chief executive of the Nassau-Suffolk Hospital Council, which lobbies on behalf of 23 member hospitals. “If this happens, the clock will be ticking on every hospital. Some will close.”

Warren says her plan would cost about $20 trillion; she proposes paying for it with tax increases on corporations and the richest 1% of Americans. Sanders also has pitched higher taxes on the wealthiest Americans to pay for government programs, including health care. He has not placed a price tag on his health care plan. 

A Medicare-for-all overhaul would need House and Senate approval, which could prove difficult since Republicans, who control the Senate, and moderate Democrats, have opposed the idea.

President Donald Trump's health care policy has focused on overturning the Affordable Care Act, which he has called a "disaster." He blames Obamacare for the rise in premiums and shrinking networks on some insurance policies.

Trump hasn't specified how he would protect more popular aspects of the decade-old ACA, including coverage protections for people with preexisting conditions.

Health care will be a focus again this Tuesday, when the Democratic candidates debate in Iowa ahead of that state's caucus on Feb. 3.

A Medicare-for-all system would lead to a large drop in revenue for providers, health system executives said.

On average, Medicare pays about 85% of a hospital’s cost to care for a patient, health system executives said. Medicaid pays closer to 75%. Medicaid payments are headed lower after Gov. Andrew M. Cuomo said he would cut hundreds of millions of dollars in Medicaid spending to address a state budget deficit. The cuts were noted in a Dec. 31 filing by his administration.

Commercial insurers, who primarily provide employer-sponsored health insurance, often pay more than the cost of care itself, health executives said.

The rate changes under a single-payer government plan would eliminate the narrow profit margins some hospitals report, and push others deeper into debt, executives said.

Industry analysts said some health care systems could be overstating their losses if more — or all — patients ended up on a government-operated plan. 

They said hospitals could save money by not having to commit resources to negotiating with private insurance companies. Experts added that uncompensated care would be wiped away, because all patients would be insured. Uncompensated care occurs when patients without insurance receive help and don’t pay for services.

Nationwide, hospitals provided $38.4 billion in uncompensated care in 2017, according to the American Hospital Association, a lobbying group in Washington, D.C. Hospitals, by law, must provide emergency care to patients regardless of their ability to pay.

On Long Island, hospitals delivered $685 million in uncompensated care in 2015, the last year for which data was made available, according to the Nassau-Suffolk Hospital Council.

“There are about 30 million people who are uninsured” nationwide, said Tricia Neuman, a senior vice president at the Kaiser Family Foundation, a nonprofit that focuses on health care policy. “Hospitals will get paid for those services now.” 

Neuman added that many people who are uninsured avoid getting care because of the high out-of-pocket costs. With insurance for all, they’ll get care “and hospitals will get paid,” she said.

There’s no way to tell how much hospitals and other providers are paid by commercial insurers because those contracts are private, said Sara R. Collins, vice president for health care coverage and access at the Manhattan-based Commonwealth Fund, a foundation whose stated purpose is to “promote a high performing health care system.”

“We don’t know what the impact would really be because there is so much variation across the country,” Collins said. “The payments are a secret, so we can’t tell if private insurance payments are really close to the cost of care, or if they’re way above the cost of care.”

Sometimes health systems are spending the extra money on administrative costs, and "sometimes it’s being spent to fund for-profit moves, such as practice acquisition,” she added.

Not all the Democratic plans include the elimination of private insurance. For example, proposals from former Vice President Joe Biden, South Bend Mayor Pete Buttigieg, Sen. Amy Klobuchar and former New York Mayor Michael Bloomberg expand the public option, but don’t wipe out the private insurance industry. 

Plans from Sanders and Warren that could eliminate private insurance entirely are getting the bulk of criticism from health care providers. 

“It’s like you want to go and redo the kitchen and some ideologue shows up and says you have to knock down the house, all the way to its foundation,” said Michael J. Dowling, president and CEO of New Hyde Park-based Northwell Health, the largest private employer in the state with a staff of 71,000. “No. I just need a kitchen.”

Dowling said plenty of other measures could be taken to lower health care costs. For example, he supports capping insurance deductibles, so more patients could afford their care.

He also said too much money is being spent by health systems to combat commercial insurers when they deny coverage. In turn, insurers hire staff to push back.

"This needs to be better managed," he said.

He added that there is a high cost to federal and state bureaucracy. Northwell is required to "track about 700 quality metrics, and maybe a dozen are worthwhile," he said.

Dowling said encouraging healthier lifestyles also leads to lower costs.

Northwell, a nonprofit, has been able to expand in nearly every specialty area and grow its research arm because of the financial support that comes with private insurance payments and federal grants, he said. 

With a 2020 operating budget of $13.5 billion, Northwell expects a profit margin of $184 million, or 1.5%. The operating budget includes money earmarked for capital improvements, such as $1 billion for beds and operating rooms at Southside Hospital in Bay Shore, a surgical pavilion at North Shore University Hospital, a new surgical suite at Cohen Children's Medical Center and an emergency department expansion at LIJ Valley Stream.

Northwell spends more than $300 million a year on cancer care, including the cost of patient care, research and capital projects. The health system said it plans to increase spending on the disease by up to 10% annually for the next three to five years. The expansion includes a block-long facility on Third Avenue in Manhattan that will include a large cancer care center. 

Northwell also opened the $46.5 million Imbert Cancer Center in Bay Shore in 2016, with the help of a gift from Bay Shore residents Rick and Susan Imbert. Still, most of the construction was paid for by Northwell's operating budget.

Dowling said Northwell's research arm, the Feinstein Institutes in Manhasset, spent about $155 million on research and development programs in 2019, including research on early-stage schizophrenia, bioelectronic medicine and oncology. Bioelectronic medicine is the use of device technology to read and modulate the electrical activity within the body’s nervous system. Northwell covered about $80 million of the cost of research, while the rest came from grants and other federal sources.

If there were dramatic cuts in insurance payments, Northwell wouldn't be able to allocate as much toward research, Dowling said.

He and other health executives also fear federal grant money could be reallocated to shore up an expensive Medicare-for-all system. If that happened, there is fear that grant money would also disappear, he said.

Northwell plans to spend $162 million on research in 2020, with about half funded by Northwell operating funds and the other half funded by federal grants and philanthropy.

“We have some very smart people here,” Dowling said. “But it doesn’t matter how smart you are. Without the money we won’t be able to do any of this.”

Manhattan-based NYU-Langone also would struggle to maintain research and expansion with a drastic cut in pay, said Dr. Andrew W. Brotman, senior vice president and vice dean for clinical affairs at the health system that operates NYU Winthrop in Mineola along with five hospitals in New York City.

“Research and development would be particularly hurt because it’s mostly supported by surpluses and philanthropy,” Brotman said. “Philanthropy would become one of the few sources, and it would be unlikely to make up the difference. Today, about 20% of  research and development spending comes from philanthropy,” while the rest comes from grants and operating revenue, he said.

Grants generally cover from 20% to 100% of a study’s cost.

“You have to supplement it to make it work,” Brotman said. “Almost all the academic medical center support, including clinical and educational enterprises, would go away without the financial help” of commercial insurance payments. 

Richard J. Murphy, president and CEO of Mount Sinai South Nassau in Oceanside, said, “I just don’t know how I’d make the math work” under a Medicare-for-all system.

Murphy said Mount Sinai South Nassau would lose $18 million to $35 million of its $600 million operations budget if a single-payer system replaced the current model, based on an analysis done by the New York State Foundation, which modeled a single-payer system on both Medicare and Medicaid payment rates. 

He added that suburban hospitals would be hit harder than urban facilities because their patient mix leans more toward private insurance. Murphy said about 40% of Mount Sinai South Nassau patients have private commercial insurance.

“In the suburban areas, a private voluntary hospital could have anywhere from 30% to 60% of its patients with private insurance,” Murphy said. “In urban areas it is significantly less than that, perhaps as low as 5% to 25% in some cases.”

Still, Murphy acknowledged that in the current system, climbing deductibles are an issue for patients with private insurance plans. He said health systems also feel the pain of those rising deductibles, because "people in high deductible plans often can’t afford" to pay the medical bills they receive while they are satisfying their deductible.

According to Kaiser, 82% of covered workers have a deductible in their plan, up from 63% a decade ago. The average individual deductible stands at $1,655, about double the $826 average from 10 years ago.

Since 2009, Kaiser said average family health insurance premiums have increased 54%, while wages are up 26% and inflation is up 20%. 

“People are concerned about premiums, prescription drug costs, and surprise bills,” Neuman, at Kaiser, said. “It’s their concern about affordability that drives these policy discussions.”

Northwell’s Dowling agreed, but said “government is not the answer to everything,” pointing to his native Ireland, where he said a national health system includes delayed access and “far lower quality” care.

"In the end, if I'm sick, I'd rather be in the United States," Dowling said.

Where the Democratic candidates stand:

ELIZABETH WARREN

  • Supports the creation of a government-administered program available to all U.S. residents
  • Public plan auto-enrolls all children

BERNIE SANDERS

  • Advocates a single-payer, government-run system for all Americans

JOE BIDEN

  • Wants to maintain and expand the Affordable Care Act
  • ACA shoppers would gain more tax credits

PETE BUTTIGIEG

  • Offers a Medicare-for-all option for those who qualify and wish to join
  • Would cap out-of-network charges

AMY KLOBUCHAR

  • Supports a public option that expands Medicare or Medicaid
  • Maintains and expands the Affordable Care Act

MICHAEL BLOOMBERG

  • Supports a public option
  • Would cap out-of-network charges

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