Gee, who'd have thought that this would have been Kent Conrad's reaction to the Medicare buy-in discussion?
Sen. Kent Conrad (D-ND) is one of the first senators to publicly criticize a Medicare buy-in proposal offered by Sen. Jay Rockefeller (D-WV), telling reporters today that he opposes plans that use Medicare levels of reimbursement, which he's long said would harm hospitals in North Dakota.
This brought a welcome departure from the usual Senate "decorum" on the part of Jay Rockefeller:
"I'm really very tired of hearing about that from him," an exasperated Rockefeller told reporters. "And it's always about North Dakota, and it's never about any other part of the country. And I thought, you know, that's what we're trying to do--we're trying to do the best thing for the country as a whole."
The country as a whole does include a lot of rural hospitals, which Jay Rockefeller also knows because West Virginia isn't a particularly metropolitan kind of state. So how would an expansion of Medicare affect rural hospitals? Ezra explores:
The answer, as far as most people can figure out, is no, Medicare does not disadvantage rural hospitals. Evidence can be found on page 57 of MedPAC's 2009 report (pdf) to Congress. Relative to urban hospitals, Medicare's payments actually covered a slightly higher percentage of rural hospital costs. To repeat: If the measure of payment adequacy is whether revenue cover expenditures, then rural hospitals did better than urban hospitals in the most recent year for which there is data.
Which gets to the difficulty of this conversation. The issue does not seem to be that rural hospitals are suffering compared with their urban cousins. Rather, it's that rural hospitals want to be paid more money. And one obvious place to squeeze some extra money out of Medicare is in what's called "input price adjustments."
Though a rural hospital and an urban hospital get the same base amount of money to treat a pneumonia patient, that money gets adjusted in different directions. One of those adjustments happens for inputs. Rural hospitals pay staff a lot less than urban hospitals do. Medicare uses the hospital's own data to make adjustments to the base rate to account for these differences. This means that rural hospitals are paid less in comparison with urban hospitals, even though it doesn't mean that they are paid less in comparison with their costs than urban hospitals.
Another argument you occasionally see is that rural hospitals get less than urban hospitals per beneficiary. But if you dig into that data, a similar story reveals itself. Adjusting for everything -- wage increases and illnesses and so forth -- rural hospitals are still paid less per beneficiary. And the reason is that they do less to each beneficiary. This is, from the perspective of the health-care system, a good thing. The problem is not that Fargo undertreats but that Miami overtreats. If you're a hospital administrator, however, it's galling to see your hospital down at the bottom of the reimbursement ladder.
So on available information, the point goes to Jay Rockefeller. Of course, while Conrad is using North Dakota as a handy example, his overall hostility to Medicare, as witnessed by his proposed entitlement "reform" commission is probably behind his problem with proposal. He wants to shrink Medicare, not expand it. And what progressives see as a potential means of opening up Medicare for larger and larger parts of the population, Conrad probably sees as the end to his crusade to slash it.