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Hospitals fighting revival of ‘the public option’

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Hillary Clinton, under pressure from the left wing of the Democratic Party, is now pushing for “public option” coverage in the state and federal health insurance exchanges.

This would be a compromise between Sen. Bernie Sanders, who backs a “Medicare-for-all” approach, and the current  very complex system of private insurance partially paid for by employers, private insurance bought in insurance exchanges, and expanded Medicaid under the Affordable Care Act.

Polls have suggested that a majority of the public favors extending Medicare t0 all or at least a public option, in which people could chose government-financed insurance instead of coverage from a private insurer.

It appears that hospital executives oppose a public option because they fear that it would  cut the payments that hospitals receive to provide care. So the American Hospital Association and the Federation of American Hospitals  has sent this message  to the Democratic Platform Drafting Committee.

“Our members have serious concerns that creating a public option with Medicare-like payments would subvert those goals by depressing insurer payments to healthcare providers and disrupting the fragile finance system that sustains hospitals today.”

The letter asserted that two-thirds of the two groups’ member hospitals received Medicare reimbursements that are below cost of providing care, while the average operating margin on Medicare reimbursements for hospitals was negative 5.8 percent in 2014.

“Adding millions more enrollees whose healthcare would be reimbursed at Medicare rates would likely threaten access to needed healthcare services, particularly for those in vulnerable communities,” the letter said.

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