Tag Archives: cost shifting

Health Care Costs

Vote for The Worst Study Award

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We know. There are so many good candidates. We give extra points to people who hype their own phony numbers, however. For example, President Obama has repeatedly relied on research by single-payer advocates to claim that more than half of all personal bankruptcies are caused by medical bills. The study even made the first page of The New York Times – above the fold. Actual number of bankruptcies due to medical bills: 17%. See John R. Graham's review.

Obama also repeatedly uses a misleading statistic from the left-leaning Families USA, claiming more than $1,000 of the premiums families pay for health coverage are due to cost-shifting from the uninsured. Actual amount shifted: $200. See Linda Gorman's review.

Worst Study Award

  • Medical Bankruptcy in the United States, 2007: Results of a National Study (55%, 148 Votes)
  • Hidden Health Tax: Americans Pay a Premium (45%, 119 Votes)

Total Voters: 267

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New Health Care Law

Health Reform = More Cost Shifting

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One of the biggest reasons health care costs are rising is because of the increasing shift of costs to private citizens because Medicare and Medicaid keep paying doctors and hospitals less and less. Reports last fall put the amount at almost $90 billion per year.

That dwarfs the extra we pay for "charity care," provided to uninsured patients. Unfortunately, this will likely get worse if more people are enrolled in Medicare and Medicaid in the future, which is what is being proposed on Capitol Hill.

Health Insurance

Cost-Shifting: Government vs. the Uninsured

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An important study by the actuarial firm, Milliman finds that Medicare underpays hospitals by $34.8 billion and physicians by $14.1 billion, while Medicaid underpays hospitals by $16.2 billion and physicians by $23.7 billion. These amounts are made up for by commercial payers, resulting in 18% greater costs for private carriers for hospital services and 12% for physician services.

Milliman does not separate out the uninsured self pay population from those covered by other government programs, but if one-half of the loss is from the uninsured, we are looking at approximately $6 billion, one-fifth of the loss from Medicare and Medicaid!

Yet the issue of uncompensated care for the uninsured is one of the primary drivers of the current push for mandatory coverage and health reform. It has been called a "hidden tax" that we all pay for, and is seen as justification for a massive reordering of the entire health care system. But hardly any attention is paid to underpayment by public programs, a problem that is perhaps five times greater!

And you wonder why public policy so often goes astray.

Health Care Costs

New Numbers on Cost Shifting

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A study for America's Health Insurance Plans (hardly a disinterested party) by Milliman finds the total amounts to just shy of $89 billion dollars annually. The cost shift from commercial insurers to compensate for Medicare patients in hospitals was $35 billion in 2006. In 2007, the cost shift from commercial insurers to compensate doctors who treat Medicaid patients was nearly $24 billion. As a result, the average family of four pays nearly 11 percent more than they otherwise would pay, for a cost of $1,788 per year.