Cost Shifting is Real
Roughly half of Medicare beneficiaries under age sixty-five are also eligible for Medicaid. These “dual eligibles” have been the subject of much research because of their low income and poor health status. Previous studies suggest that some states seek to shift costly health care services for this group out of state-run Medicaid programs and into the federally funded Medicare program—for example, replacing nursing home care with hospital care. Using state-level data on dual eligibles under age sixty-five, we found support for this hypothesis. In states with below-average per capita Medicaid spending, corresponding Medicare spending was above average. These state-level estimates also revealed a nearly threefold difference in total—Medicare plus Medicaid—price-adjusted spending per person, ranging from $16,309 in Georgia to $43,587 in New York.
Study on state spending on “dual eligibles” in Health Affairs.
I can see this leading to all sorts of battles between states and the federal government.
Most studies find cost-shifting is very rare. In a competitive market, it is not very easy to shift the cost of one customer to another customer. To the extent this does occur, it’s probably price discrimination.
Despite the supposed widely known presence of cost-shifting (e.g. we all supposedly pay more for health insurance because of the uninsured; that was the excuse for why we need the Affordable Care Act), little cost shifting actually exists in health care. But, due to its lack of price competition, cost-shifting is probably more apt to occur in health care than in any other segment of the economy.
Another clue to state and federal attitudes on cost shifting might be provided by the fact that some Medicaid programs pay Medicare premiums, deductibles and co-insurance for Medicare recipients that are dual eligible.
Then there’s the federal “clawback,” aka the “phased-down State contribution” designed to have states continue paying for the Medicaid drugs that Part D made available at federal expense.
It’s sad that this unethical behavior will inevitably be hung around the necks of the states. After all, they’re manipulating the system to minimize expenses, right?
“As long as the music is playing, you’ve got to get up and dance,”