Bernie’s Hospital Bailout


Bernie Sanders wants the taxpayers to bail out the hospitals that he wants to bankrupt. There’s a Yiddish word for this that Bernie should know – hutzpah. It means “unbelievable gall; audacity.” The Wall Street Journal editorial board calls Bernie to account for this over-the-top move, even for a politician.

Sanders knows his Medicare for All bill will bankrupt our hospitals. So he’s already come up with an offer to ameliorate the damage – $20 Billion in federal bailout funds for struggling hospitals. Bernie used the occasion of visiting Philadelphia’s Hahnemann Hospital, which is in bankruptcy proceedings, to unveil his plan.

Bernie blames the failure of the hospital on corporate greed perpetrated by a private-equity firm. But he fails to appreciate the reality that two-thirds of Hahnemann’s patients are on government insurance, either Medicare or Medicaid. Medicare and Medicaid are notorious for paying hospitals (and physicians) less than what it costs to provide services.

According to the WSJ, the best estimates are that Medicare and Medicaid pay hospitals on average about 87% to 90% of the actual cost of care, often lower in high-cost areas like New York City. (In other words, hospitals lose money on every Medicare and Medicaid patient.) Hospitals then shift costs onto private insurers, which tend to pay more than 140% of costs, according to data from the American Hospital Association.

The Centers for Medicare and Medicaid Services (CMS) reported earlier this year that “more than two-thirds of hospitals are losing money on Medicare inpatient services,” according to the latest data. If they can’t attract enough privately insured customers, they eventually will fall into bankruptcy.

Sanders obviously understands this dilemma because he’s already making plans for more hospitals to fail under his Medicare for All plan. His plan is endorsed by other presidential candidates including Elizabeth Warren, Corey Booker, Kamala Harris (though her plan is a bit more nuanced) and others.

But Bernie is only making plans to bail out hospitals. What about doctors? The unspoken truth is they will be affected even more. There’s no bailout being discussed for physician practices that fail. The result will be even earlier retirement for more physicians and an even greater physician shortage than already exists.

According to a report in 2019 by the American Association of Medical Colleges, there will be a shortage of 122,000 physicians by 2032. These numbers were estimated without consideration of the impact of Sanders’ Medicare for All plans.

The Journal of the AMA this year published estimates of what Medicare rates would mean: $151 Billion a year in lost revenue for community hospitals. The authors note, “Hospitals currently operating at costs substantially above Medicare payment rates may have limited ability to reduce their costs quickly.”

This is all a reminder that Sanders and the Progressives aren’t really interested in universal coverage as much as they are determined to achieve a federal takeover of American healthcare.