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A New Government-Run Plan Would Impose Significant Financial Losses on California Hospitals
Date:7/16/2009

WASHINGTON, July 16 /PRNewswire-USNewswire/ -- Many California hospitals would face substantial net losses if there were a large scale shift of individuals with private coverage to a government-run plan that reimburses providers at Medicare rates or Medicare rates plus 10 percent, according to a new hospital-by-hospital analysis released today by America's Health Insurance Plans (AHIP), based on data from California's Office of Statewide Health Planning and Development (OSHPD).

"California hospitals have long supported the goal of comprehensive health care reform," said C. Duane Dauner, President and CEO of the California Hospital Association. "Hospitals know firsthand the high cost of today's fractured health care financing and delivery systems, and the uninsured. The AHIP report, however, demonstrates the risks of a health care reform proposal that does not protect the availability and stability of health care providers.

"Both Medicare and Medi-Cal already severely underpay health care providers in California," Dauner continued. "These governmental payment shortfalls leave hospitals with difficult choices between reducing services and providing care to patients who need it. California hospitals cannot afford a new government-run plan that would expand the underpayments to providers. A new government-run program that adopts Medicare rates is not a solution."

The OSHPD data were used to examine the financial impact a government-run plan would have on hospitals in the state if patients with private coverage moved to a government-run plan. The AHIP analysis evaluated four potential scenarios: the impact on hospitals if 50 percent or 100 percent of patients moved to a government-run plan that paid Medicare fee-for-service (FFS) rates, as well as the impact if 50 or 100 percent of patients moved to a government-run plan that paid rates at Medicare
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SOURCE America's Health Insurance Plans
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