New Report: Maryland’s Medicare-for-All-Style Hospital Revenue Caps Have Cut Care and Pushed Up Costs

NEW YORK, NY – Supporters of single-payer health care have long argued that capping what hospitals can earn for services will cut waste and inefficiency without compromising quality of care. Maryland, which has limited total revenues at each hospital since 2014, is the most extensive test of this model in the country. New research finds that the outcome is the opposite of that intended. 

In a new Manhattan Institute report, senior fellow Chris Pope finds that the "savings" credited to Maryland’s hospital payment system in official evaluations are largely due to hospitals treating fewer patients rather than eliminating needless expenses. Because hospitals’ revenues do not increase proportionally as they treat more patients, facilities are strongly incentivized to withhold the costlier procedures and avoid treating the most seriously ill patients. That has allowed them to charge more for those patients whom they do still treat. 

Key findings include: 

• Wait times in Maryland’s emergency departments rose from 137 percent to 153 percent of the national average between 2014 and 2023 and are now the longest in the country.
• Hospital admissions in Maryland fell from 7 percent above the national rate to 18 percent below it between 2008 and 2023. 
• Kidney transplant rates dropped from 161 percent to 60 percent of the national average between 2012 and 2023, as hospitals cut back on the most expensive procedures. 
• The cost of common inpatient procedures rose 7 to 34 percent more than it did nationwide between 2008 and 2022. 

A federal initiative is encouraging other states to adopt similar global budget models. But Maryland’s experience shows that capping hospital revenue cuts care rather than waste, and Pope argues that policymakers seeking to lower costs should enhance competition between providers rather than eliminate it. 

Click here to read the full report.