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Capping hospital revenue with lump-sum budgets creates an incentive to treat fewer patients.
“Medicare for All” is a popular slogan for leftist Democratic candidates on the campaign trail, but they rarely address how it would upend hospital financing. At the heart of Sen. Bernie Sanders’s Medicare for All Act is a proposal to overhaul payments for hospital care. It would allocate “global budgets” to institutional medical providers—limiting them to lump sums to cover operating expenses—instead of allowing them to get more revenue for each additional patient they treat.
Advocates of this model argue that hospital spending is lower in other developed countries, where hospitals are often subject to global budgets. Yet this model has also been used statewide in Maryland since 2014. Although global budgets have slowed the state’s healthcare spending, Maryland hospitals are treating fewer patients and charging substantially more for each.
Continue reading the entire piece here at The Wall Street Journal
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Chris Pope is a senior fellow at the Manhattan Institute, where his research focuses on entitlement reform, insurance markets, and healthcare payment policy.