Limiting Private Insurance Reimbursement to Medicare Rates Would Reduce Health Spending by About $350 Billion in 2021
Tables
| Appendix Table 1: Employer and Employee Share of Current Spending, Spending Under Medicare Rates, and Potential Reduction, in $ billions 2021 | |||
| Current Spending ($B) | Spending Under Medicare Rates ($B) | Potential Reduction in Spending ($B) | |
| Employer-sponsored insurance | |||
| Total Spending on health services for enrollees in group health plans | $757 | $447 | $310 |
| Employer share of spending | $474 | $280 | $194 |
| Employee share of spending funded by premiums | $175 | $103 | $72 |
| Employee out-of-pocket spending | $107 | $63 | $44 |
| Private non-group | |||
| Total health care spending for private non-group | $102 | $60 | $42 |
| NOTES: All spending numbers are for people under 65 years old. 2021 spending is calculated by multiplying 2018 estimate by projected growth in private health insurance spending in the National Health Expenditures data. SOURCE: KFF analysis of FAIR Health, MarketScan, American Community Survey, and National Health Expenditures data. |
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| Appendix Table 2: Current Spending for the Privately Insured, Medicare to Allowed Amount Ratio, Spending at Medicare Rates and Potential Reduction in Spending, in $ billions for 2021 | ||||
| Current Total Spending ($B) | Private Insurance Allowed Amount to Medicare Ratio | Spending Under Medicare Rates ($B) | Potential Reduction in Spending ($B) | |
| Health care services | $859 | 170% | $507 | $352 |
| Service category | ||||
| Emergency Department | $41 | 221% | $19 | $23 |
| Inpatient | $242 | 165% | $147 | $95 |
| Laboratory | $13 | 177% | $8 | $6 |
| Other | $42 | 181% | $23 | $19 |
| Outpatient | $312 | 203% | $154 | $158 |
| Physician Office | $202 | 133% | $152 | $50 |
| SNFs | $2 | 108% | $1 | $0 |
| Urgent Care | $4 | 146% | $3 | $1 |
| Administrative Costs | $152 | $89 | $62 | |
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NOTES: All spending numbers are for people under 65 years old with private health insurance coverage. 2021 spending is calculated by multiplying 2018 estimate by projected growth in private health insurance spending in the National Health Expenditures data. Administrative costs assume constant loss ratio of 85%.
SOURCE: KFF analysis of FAIR Health, MarketScan, American Community Survey, and National Health Expenditures data.
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| Appendix Table 3: Current Spending for the Privately Insured, Medicare to Allowed Amount Ratio, Spending at Medicare Rates and Potential Reduction in Spending, in $ Billions for 2021 | |||||||||
| Current Total Spending ($B) | Private Insurance Allowed Amount to Medicare Ratio | Total Spending Under Medicare Rates ($B) | Potential Reduction in Spending ($B) | Current OOP Spending ($B) | OOP Spending at Medicare Rates ($B) | Potential Reduction in OOP Spending ($B) | % in group plans | % in non-group plans | |
| Age group: 0-3 | |||||||||
| Female | $20 | 150% | $14 | $7 | $2 | $1 | $1 | 92% | 8% |
| Male | $25 | 152% | $17 | $9 | $3 | $2 | $1 | 92% | 8% |
| Total | $46 | 151% | $30 | $15 | $5 | $3 | $2 | 92% | 8% |
| Age group: 4-18 | |||||||||
| Female | $35 | 158% | $22 | $13 | $7 | $4 | $2 | 90% | 10% |
| Male | $37 | 158% | $24 | $14 | $7 | $4 | $2 | 90% | 10% |
| Total | $72 | 158% | $46 | $27 | $13 | $9 | $5 | 90% | 10% |
| Age group: 19-35 | |||||||||
| Female | $108 | 170% | $63 | $44 | $19 | $12 | $7 | 88% | 12% |
| Male | $54 | 172% | $31 | $23 | $10 | $6 | $4 | 88% | 12% |
| Total | $161 | 170% | $95 | $67 | $29 | $17 | $11 | 88% | 12% |
| Age group: 36-44 | |||||||||
| Female | $75 | 171% | $44 | $31 | $12 | $7 | $5 | 91% | 9% |
| Male | $43 | 172% | $25 | $18 | $7 | $4 | $3 | 91% | 9% |
| Total | $118 | 171% | $69 | $49 | $19 | $12 | $7 | 91% | 9% |
| Age group: 45-54 | |||||||||
| Female | $108 | 173% | $63 | $45 | $15 | $9 | $6 | 89% | 11% |
| Male | $81 | 174% | $47 | $34 | $11 | $6 | $4 | 90% | 10% |
| Total | $189 | 173% | $110 | $80 | $25 | $15 | $10 | 89% | 11% |
| Age group: 55-64 | |||||||||
| Female | $140 | 172% | $81 | $59 | $16 | $10 | $6 | 84% | 16% |
| Male | $132 | 173% | $76 | $56 | $14 | $8 | $5 | 86% | 14% |
| Total | $272 | 173% | $158 | $115 | $30 | $18 | $12 | 85% | 15% |
| NOTES: Analysis assumes spending is distributed across enrollees in group and non-group plans consistent with their enrollment in such plans. 2021 spending is calculated by multiplying 2018 estimate by projected growth in private health insurance spending in the National health Expenditures data. SOURCE: KFF analysis of FAIR Health, MarketScan, American Community Survey, and National Health Expenditures data. |
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| Appendix Table 4: Current Spending Per Person with Private Health Insurance, Spending Per Person at Medicare Rates and Potential Reduction in Spending Per Person, 2021 | |||
| Current Spending Per Person ($B) | Spending Per Person Under Medicare Rates ($B) | Potential Reduction in Spending Per Person ($B) | |
| Overall (0-64) | $4,973 | $2,933 | $2,040 |
| Child (0-18) | $2,932 | $1,899 | $1,033 |
| Adult (19-64) | $5,012 | $2,916 | $2,096 |
| Older Adult (60-64) | $10,353 | $5,990 | $4,363 |
| Age group: 0-3 | |||
| Female | $4,907 | $3,272 | $1,635 |
| Male | $5,788 | $3,830 | $1,958 |
| Total | $5,360 | $3,558 | $1,802 |
| Age group: 4-18 | |||
| Female | $2,275 | $1,443 | $833 |
| Male | $2,288 | $1,452 | $836 |
| Total | $2,281 | $1,447 | $834 |
| Age group: 19-35 | |||
| Female | $4,520 | $2,667 | $1,852 |
| Male | $2,215 | $1,283 | $932 |
| Total | $3,356 | $1,970 | $1,387 |
| Age group: 36-44 | |||
| Female | $5,825 | $3,400 | $2,426 |
| Male | $3,370 | $1,963 | $1,407 |
| Total | $4,612 | $2,690 | $1,922 |
| Age group: 45-54 | |||
| Female | $7,113 | $4,118 | $2,995 |
| Male | $5,608 | $3,234 | $2,373 |
| Total | $6,378 | $3,687 | $2,691 |
| Age group: 55-64 | |||
| Female | $9,282 | $5,381 | $3,901 |
| Male | $9,437 | $5,448 | $3,989 |
| Total | $9,356 | $5,413 | $3,944 |
| NOTES: 2021 spending is calculated by multiplying 2018 estimate by projected growth in per-capita private health insurance spending in the National Health Expenditures data. SOURCE: KFF analysis of FAIR Health, MarketScan, American Community Survey, and National Health Expenditures data. |
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