In advance of legislative consideration of hospital DSH payments, Wisconsin’s Legislative Fiscal Bureau wrote:
Some economists have disputed the claim that low reimbursement rates paid to healthcare providers by public programs (including both Medicaid and Medicare), result in cost shifts to commercial insurance payers. They assert that the rates charged to commercial insurers by a hospital are affected primarily by market factors that are independent of the rates paid by public programs. That is, a hospital generally seeks to maximize net revenues, regardless of the mix of its commercially insured and publicly-funded patients. The extent to which hospitals increase or decrease prices charged to commercial insurers is dependent upon their market power in relation to those insurers and competing hospitals. By contrast, the idea that a hospital charges higher rates to commercial insurers in response to lower public program reimbursement rates implies that the hospital has the market power to dictate a higher price to commercial insurers that it would not otherwise exercise in the absence of low public program reimbursement rates. In support of this view, these economists cite evidence that suggests that hospitals either reduce costs in response to constrained revenues from public programs, or attempt to attract a larger pool of commercially insured patients by reducing the price charged to commercial insurers.
Some economists. Could be almost anyone.
