“Congress will privatize Medicare to cover shortfalls, so the hospital would not be profitable and end up costing the county money.”

We rate this:  MOSTLY FALSE

Medicare privatization is one of numerous options to cover the Medicare cash flow shortfall, and not the best one because Medicare is actually highly efficient at delivering health insurance relative to private insurance companies.  (Medicare administrative costs are 2% of income, vs. an average of 17% for private insurance companies).[1] [2]  Other better options exist, including a combination of raising revenues and slowing the growth in costs.   Increasing the Medicare payroll tax from the current rate of 1.45% to 1.8% would cover the shortfall and only cost a person making $35,000 an extra $122.50 per year/$10.21 per month. [3]

We rate the impact: Neutral to Positive.

Even if Medicare is privatized, private insurance companies reimburse up to 300% more to hospitals than to clinics, which is more than double what Medicare reimburses.  Private insurance companies also have higher amounts that they allow for services than Medicare does.

[1] http://healthaffairs.org/blog/2011/09/20/medicare-is-more-efficient-than-private-insurance/

[2] https://www.fool.com/retirement/2016/12/03/is-paul-ryans-medicare-privatization-proposal-good.aspx

[3] http://www.cbpp.org/research/health/medicare-is-not-bankrupt

*** Researched by Susan Barney

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