A key provision of President Donald Trump’s health care bill would dramatically shrink Medicare payments to hospitals, potentially eliminating some or all of the program’s funding.
But a new analysis by Avalere Health shows the proposal would leave Medicare beneficiaries with much less to spend on health care.
The Kaiser Family Foundation analyzed data from the Department of Health and Human Services’ website that shows Medicare payments are down roughly $500 billion since 2009.
That’s because the Affordable Care Act increased Medicare’s coverage to cover an average of 11 million more Americans in 2020 than they had under the previous system.
But the cuts in payments to hospital systems would make it more difficult for Medicare to provide those same benefits to those same beneficiaries in the future.
If the cuts are made, Avalere estimated the cut to Medicare’s per capita health care spending would be roughly $5,600 a year for Medicare recipients and $6,100 for beneficiaries in private insurance.
This would be less than the roughly $6 an hour workers in the private sector get on average, but still well above the roughly 30 percent average cut that hospitals receive from Medicare.
A separate Avalere analysis found the Medicare cuts would result in roughly $4,000 more for Medicare beneficiaries, and about $8,000 for beneficiaries of Medicaid.
Medicare beneficiaries receive about $15,000 a year more per person in private health insurance than Medicare beneficiaries do, according to Avalere.
The Avalere study did not include any analysis of the impact on private insurance and Medicaid.
But its analysis, which comes on the heels of a similar study released this week by Avaleter, shows that the cuts to Medicare payments would likely result in a $1,500 annual cut to private health coverage.
The Trump administration’s health insurance overhaul is expected to be signed into law on Friday.
It would slash Medicare payments and limit access to care for Medicare patients with disabilities and high-cost chronic conditions.
The Congressional Budget Office says it expects the health care overhaul to increase the number of Medicare beneficiaries by an average 6 million over the next decade, but also would have a significant impact on the amount of care the program provides to Medicare beneficiaries.
Medicare is the federal government’s largest health care program.
Under current law, Medicare covers about 11 million Medicare beneficiaries and 6 million Medicaid beneficiaries, with the latter group receiving about $17,500 more per capita than Medicare recipients.
Medicare pays for about 60 percent of private health care expenses for Medicare enrollees, according the Congressional Budget Service.
The cuts to the Medicare payments system would also have a major impact on health coverage for Medicare beneficiary enrollees.
In 2020, Medicare enrollee payments averaged about $4.6 billion per year, according data from Avalere, compared to $5.3 billion for Medicaid beneficiaries.
If Medicare cuts were made permanent, the Avalere report estimated Medicare beneficiaries would receive about an extra $6 billion less per year from 2019 to 2024, the year after the cuts would be made.
Medicare would also see its per capita spending on medical care fall from about $5 an hour to $3.50 an hour by 2020, according Avalere data.
The CBO projects that the Medicare reductions would have an effect on the number and size of Medicare beneficiary hospitals, which have been growing rapidly.
Hospitals would need to reduce staffing by about 10 percent, reducing their ability to provide hospital-level care and services to Medicare patients, according Kaiser.
Hospices would also be required to limit the number or types of care they provide to Medicare enrolments, Avalero found.
Avalere’s analysis found Medicare payments for hospital care would be down roughly 4 percent per year by 2021, and by 7 percent in 2024.
The savings to Medicare would amount to about $7.6 trillion, according with Avalere calculations.
But that estimate assumes that Medicare will continue to cover the same level of care to all Medicare beneficiaries for all of 2020, which is not the case.
For example, some of the Medicaid patients covered by Medicare will receive care in hospitals in 2020, but the number who will receive those services will be much smaller than it was under the Affordable Act, the Kaiser report said.
Medicare enrollers receiving private insurance, however, will continue receiving Medicare-funded hospital services, and that will mean Medicare will have more money to spend for those services.
Avaleter’s analysis of Medicare payments found that the government would receive $3 billion more in Medicare payments in 2020 under the current Medicare payment system, while about $3,000 per beneficiary would get $2,500 less in 2020.
The Medicaid cuts would lead to a $5 billion reduction in the total amount that Medicare would receive from 2019 through 2024, according, Avaleter said.
This is not just a matter of the federal budget.
Medicare’s funding was cut in part because of a Supreme Court decision in 2003 that left the Affordable Housing Act largely intact, meaning states and localities are not able to increase funding for Medicaid under the ACA.
This means the federal funds Medicare uses to pay for Medicaid enrollees