Cost-Shifting

August 18th, 2009 | Healthcare Reform | Seminars & Publications

I have heard that my article on the implications of "managed care" in the private health insurance system in the UK will be published in the September Independent Practitioner Today. The following is an extract from that article on cost-shifting.

"Another common form of cost shift exists where providers compelled to provide a discount to an insurer like Medicare or a large private insurer with a strong negotiating position attempt to recoup that discount from insurers with less negotiating strength or from patients with limited insurance coverage or without insurance.  This is a principal reason why the stated price for a service in many U.S. practices is often more than double what they expect to be paid by insurers.  In the area of hospital charges, a stated fee of 10 times what the insurer will actually pay under the contracted rate is not unusual.  Only someone unfortunate enough to be without coverage is faced with paying the stated price since the practice is generally contractually obligated to accept whatever the insurance company says their services are worth.  The attempt by providers to recoup managed care discounts is one of the basic structural reasons for healthcare cost inflation in the States."

I published an article in CPA Expert  Computing The Growth Rate In Physician Practice Revenue in the Winter, 2005 Edition that looks at the actual math of the cost-shift.

I have no way of knowing what the CBO's cost projections are based on at the nuts and bolts level, but it strikes me that if the government took over a larger share of the health insurance system then it presently controls through Medicare and Medicaid with the so-called "Public Option," there would be fewer places to shift costs to. That means that private insurance rates would skyrocket (see the math in the CPA Expert article) OR Medicare and Medicaid rates would skyrocket. The only offset to that result is income tax increases.

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