If private insurers used Medicare rates to pay hospitals and other health care providers then the total health care expenses for people with private health insurance would be around $352 billion less in 2021, according to a recent finding of KFF. This would mean a fall of 41% from $859 billion in proposed healthcare spending for the people with private insurance in 2021.
- The amount that would be saved if the policies are negotiated and the compensations are allotted would be spread among employers ($194 billion), and employees ($116 billion) and non-group market ($42 billion) assuming proportional savings throughout the private insurance market.
- Nearly 45% of the total reduction in spending would be for outpatient hospitals services, where the price gap between the private insurance and Medicare is relatively high, 27% for inpatient services and 14% for the physician’s office visits.
- The research has also found that about one-third of the total reduction would come from the lower health care spending for privately insured adults who are in the 55-64 age group and tend to use more healthcare services than the younger citizens of the nation.
- The KFF report has not considered a particular health reform plan. It has simply focussed on how lower payments rates could reduce health spending. Those payment changes could be achieved through a variety of proposals such as Medicare for all, a public option, lowering the age of Medicare eligibility and all-payer-rate settings.