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Controlling hospital capacity under single payer Medicare for All

July 23, 2019

Topics: Quote of the Day

By Adam Gaffney, M.D., M.P.H.; Danny McCormick, M.D.; David H. Bor, M.D.; Anna Goldman, M.D.; Steffie Woolhandler, M.D., M.P.H.; David U. Himmelstein, M.D.
Annals of Internal Medicine, July 23, 2019


Background: Persons with comprehensive health insurance use more hospital care than those who are uninsured or have high-deductible plans. Consequently, analysts generally assume that expanding coverage will increase society-wide use of inpatient services. However, a limited supply of beds might constrain this growth.

Objective: To determine how the implementations of Medicare and Medicaid (1966) and the Patient Protection and Affordable Care Act (ACA) (2014) affected hospital use.

Design: Repeated cross-sectional study.

Setting: Nationally representative surveys.

Participants: Respondents to the National Health Interview Survey (1962 to 1970) and Medical Expenditure Panel Survey (2008 to 2015).

Measurements: Mean hospital discharges and days were measured, both society-wide and among subgroups defined by income, age, and health status. Changes between preexpansion and postexpansion periods were analyzed using multivariable negative binomial regression.

Results: Overall hospital discharges averaged 12.8 per 100 persons in the 3 years before implementation of Medicare and Medicaid and 12.7 per 100 persons in the 4 years after (adjusted difference, 0.2 discharges [95% CI, −0.1 to 0.4 discharges] per 100 persons; P = 0.26). Hospital days did not change in the first 2 years after implementation but increased later. Effects differed by subpopulation: Adjusted discharges increased by 2.4 (CI, 1.7 to 3.1) per 100 persons among elderly compared with nonelderly persons (P < 0.001) and also increased among those with low incomes compared with high-income populations. For younger and higher-income persons, use decreased. Similarly, after the ACA’s implementation, overall hospital use did not change: Society-wide rates of discharge were 9.4 per 100 persons before the ACA and 9.0 per 100 persons after the ACA (adjusted difference, −0.6 discharges [CI, −1.3 to 0.2 discharges] per 100 persons; P = 0.133), and hospital days were also stable. Trends differed for some subgroups, and rates decreased significantly in unadjusted (but not adjusted) analyses among persons reporting good or better health status and increased nonsignificantly among those in worse health.

Limitation: Data sources relied on participant recall, surveys excluded institutionalized persons, and follow-up after the ACA was limited.

Conclusion: Past coverage expansions were associated with little or no change in society-wide hospital use; increases in groups who gained coverage were offset by reductions among others, suggesting that bed supply limited increases in use. Reducing coverage may merely shift care toward wealthier and healthier persons. Conversely, universal coverage is unlikely to cause a surge in hospital use if growth in hospital capacity is carefully constrained.

Primary Funding Source: None.


Medicare for All unlikely to cause surge in hospital use: Harvard study

Physicians for a National Health Program, July 22, 2019

Analysis finds no increase in hospitalizations after previous large coverage expansions; increased care for newly insured was counterbalanced by small decreases for the healthy and wealthy

As political leaders debate the merits of a future Medicare for All system in the U.S., some analysts predict that implementing universal coverage could cause a sharp, unaffordable increase in hospital use and costs, overwhelming the system. But new research by a team at Harvard Medical School and The City University of New York at Hunter College, published today in the Annals of Internal Medicine, contradicts that assumption, finding that past insurance expansions did not result in a net increase in hospital use. Instead, researchers found a redistribution of care, with increases in hospital care among those newly insured that was offset by small decreases among healthier and wealthier Americans.

The study examined changes in hospital use among those who gained coverage — as well as those whose coverage remained unchanged — after the implementation of Medicare and Medicaid in 1966 and the Affordable Care Act (ACA) in 2014. Each of those programs provided new coverage to about 10% of the U.S. population, about the same share expected to gain coverage under a Medicare for All program. The researchers analyzed large national surveys from both the Medicare/Medicaid and ACA eras, and examined hospital use before and after the coverage expansions. Hospital admissions averaged 12.8 for every 100 persons in the three years before Medicare, and 12.7 per 100 in the four years after Medicare’s implementation. Similarly, the hospital admission rate was statistically unchanged in the wake of the ACA, averaging 9.4 admissions per 100 in the six years before the ACA coverage expansion and 9.0 per 100 in the two years’ afterward.

While the study found no overall change in hospital use, the coverage expansions redistributed care. Medicare increased hospital admissions by 3.7 per 100 among the elderly, and by 0.7 per 100 among the poorest one-third of the population, i.e., the groups that gained new coverage. In contrast, hospitalizations fell slightly (about 0.5 per 100) for younger and wealthier individuals. After the ACA, admissions rose by 1.5 per 100 among sicker Americans, but fell by 0.6 per 100 among those in good health. The researchers also found a slight shift of hospital care toward the poor after the ACA.

Dr. Steffie Woolhandler, a study author and distinguished professor of public health at CUNY’s Hunter College who is also on the faculty at Harvard Medical School commented: “The good news is that even big coverage expansions didn’t increase hospitalizations overall, indicating that universal coverage won’t cause a surge in care, and that Medicare for All is affordable. On the other hand, it implies that overturning the ACA would deprive millions of needed care without saving any money.”

The researchers hypothesized that the limited supply of hospital beds constrained the overall use of hospitals when coverage was expanded. They noted that many previous studies, such as the Rand and Oregon Health Insurance Experiments, only examined the effects of greater coverage for the newly insured, not changes among those whose coverage was unchanged, nor the societal effects of expanded coverage.

“We’ve long known that when people get new or better coverage, they use more health care,” said senior author Dr. David Himmelstein, a distinguished professor of public health at CUNY’s Hunter College and lecturer in medicine at Harvard Medical School. “What we didn’t know is what happens to those who were already well-insured, and how this plays out society-wide given the limited number of hospital beds, doctors and nurses,” he stated. “Our data shows that if you sensibly control hospital growth, you can cover everybody without breaking the bank.”

Lead author Dr. Adam Gaffney, instructor in medicine at Harvard Medical School and a pulmonary and critical care physician at Cambridge Health Alliance, suggested that the small reductions in hospitalizations among healthier and wealthier individuals are unlikely to be harmful. “We know that the well-insured often receive unnecessary hospitalizations,” said Dr. Gaffney. “While defibrillator implants and coronary artery stents can be lifesaving, thousands of patients each year get these and other procedures even when they offer no benefit,” he added, pointing to an Institute of Medicine study that found that nearly one-third of medical spending is wasted. “The fact that coverage expansions shift hospital care to those who need it, and reduce care for groups currently getting excessive and possibly harmful interventions, means that universal coverage could help everyone,” he stated.

Physicians for a National Health Program is a nonprofit research and education organization whose more than 23,000 members support single-payer national health insurance. PNHP had no role in funding or otherwise supporting the study described above.



By Don McCanne, M.D.

It is often assumed that expanding health care coverage to the uninsured and underinsured will unleash pent-up demand for inpatient hospital services. This important study shows that two periods in our history that expanded coverage by an amount that would be comparable to implementation of a single payer Medicare for All program – Medicare and Medicaid in 1966 and the Affordable Care Act in 2014 – actually may have improved allocation of our hospital resources. There was no surge in occupation of hospital beds, but use increased for older and lower-income populations (groups noted for often having greater health care needs) while decreasing for younger and higher-income persons (generally healthier populations).

System capacity is important. Excess capacity can result in over-provision of services of little value whereas deficient capacity can impair access to essential services. Two features of the single payer model can address these problems: 1) Regional planning and separate budgeting of capital improvements can establish optimal levels of capacity, taking surge capacity into consideration, and 2) Global budgeting of hospitals, much as fire departments are budgeted, can provide assurance that adequate funds are available to meet the needs, with contingency funds for crises, while not wasting funds on excess administrative services or on unnecessary profits.

We can dismiss alarmist comments such as that of Rep. John Delaney who said that, under Medicare rates, “Every single hospital administrator said they would close.” That’s ridiculous. Under single payer Medicare for All, the money will be there; it will be collected equitably and distributed equitably, and all of us will have the health care that we need. Bringing everyone under the umbrella will not place undue stress on the system providing we choose stewards for the system who know how to size the umbrella properly.

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About the Commentator, Don McCanne

Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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