Here’s a question for you. If one government program creates a major problem so that you need a government bailout to fix that problem, wouldn’t it make more sense not to implement the government program in the first place? That is the question some are asking about the current proposal known as Medicare for All.
Recently, Senator Bernie Sanders proposed a $20 billion federal bailout for struggling hospitals. He announced this plan in Philadelphia because one of the hospitals is currently in bankruptcy proceedings.
The editors at the Wall Street Journal observed that usually politicians “pass a bailout to clean up a mess they created in the past.” In this case, they suggest the senator “wants taxpayers to save hospitals after he bankrupts them.” Let me explain why they say that.
The hospital in Philadelphia currently has nearly two-thirds of their patients on government insurance (either Medicare or Medicaid). Those programs are notorious for paying hospitals less than what it costs to provide services. Some estimate that they pay 90 percent or even less than the actual cost of care. So how do hospitals traditionally cover their costs? They shift costs onto private insurers, which tend to pay more than 140 percent of costs (according to the American Hospital Association).
The Centers for Medicare and Medicaid Services report that “more than two-thirds of hospitals are losing money on Medicare inpatient services.” If Medicare for All was implemented, hospitals would go broke. That is what former member of Congress John Delaney said in the June Democratic presidential debate. He said if you go to hospitals and ask them what would happen if they were paid at the Medicare rate, “every single hospital administrator said they would close.”