• Consolidation of the self-promotional (something for everyone?)

    I’ve got a lot to announce today. I could spread it out over multiple posts, even drag it out for a few days. That might better serve my own interests, but it would be less efficient for readers. I’m not going to waste your time. So, here’s a brief round-up, some of which I’ll return to in the future.

    1. The latest Health Wonk Review is up, hosted by Avik Roy. Getting a mention is my column with Aaron on how the health reform game has changed. As usual, there’s plenty else in HWR to keep you busy. But if that’s not your thing then, …

    2. I’m briefly quoted in a Marketplace Morning Report piece by Nancy Marshall Genzer. The topic is the relatively low rate of growth of health care spending in 2009. We might be happy about that, if only it were good news. It isn’t. It reflects massive unemployment and associated loss of insurance coverage. Anyway, my one-liners on public radio are how many of my old friends and colleagues are reminded of my existence. It’s the Facebook of yore. (Well, not yore so much as 2002, say.) But if this is not your thing then, …

    3. My paper on hospital cost shifting will be published in The Milbank Quarterly in March. If you can’t wait that long, an ungated working paper version [pdf] and a companion technical guide for practitioners [pdf] are available at the Health Care Financing & Economics website. I promise to unpack the contents of the paper in some blog posts. For now, here’s the abstract of the working paper:

    How Much do Hospitals Cost Shift? A Review of the Evidence

    Context: Hospital cost shifting—that private payers are charged more in response to shortfalls in public payments—has long played a role in debate over health care policy. Though there is considerable theoretical and empirical literature on the subject, it has not been critically reviewed and interpreted since Morrisey did so nearly 15 years ago (Morrisey 1993, 1994, 1996). Much has changed since then, both in terms of empirical technique and in the health care landscape. In this paper I critically examine the theoretical and empirical literature on cost shifting since 1996, synthesize the predominant findings, suggest their implications for the future of health care costs, and put them in the current policy context.

    Methods: Relevant literature was identified by database search. Papers providing descriptive policy context are considered first since policy shapes the health care market landscape within which cost shifting may or may not occur. Theoretical work is examined second as theory provides hypotheses and structure for empirical work. Then the empirical literature is analyzed in the context of the policy environment and in light of theoretical implications for appropriate econometric specification.

    Findings: Analyses and commentary based on descriptive, industry-wide hospital payment-to-cost margins by payer provides a false impression that cost shifting is a large and pervasive phenomenon. More careful theoretical and empirical examinations suggest that cost shifting can and has occurred, but usually at a relatively low rate. Margin changes are also strongly influenced by the evolution of hospital and health plan market structures and changes in underlying costs.

    Conclusions: Policymakers should take hospital and insurance industry claims of inevitable, large scale cost shifting with a grain of salt. Though a modest degree of cost shifting may result from changes in public payment policy, it is just one of many possible effects. Moreover, changes in the balance of market power between hospitals and health care plans also have a significant impact on private prices. Since they may increase hospital market power, provisions of the new health reform law that may encourage greater provider integration and consolidation should be implemented with caution.

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    • Dr. Frakt,

      I have a question.

      I read Uwe’s piece on hospital pricing. If hospitals do not really know how they price or charge items (He says basically users of healthcare are blind), how can we really get good numbers on cost sharing?

      I have been interested in how much this actually occurs in healthcare.

      Thanks,

    • I look forward to your series on cost shifting. Have been wondering about this for a while. The fact that private insurance pays so much more than Medicare has always puzzled me.

      Steve

    • Dr. Frakt,

      While I understand your review did not find a generalized cost shifting, my family’s 2 recent hospitalizations would have been charged at more than 10 times the rate paid by the insurance companies, per their own billing, if we had not had coverage.

      Whether this is true cost-shifting is not within my field. But anecdotally, this certainly feels like it.

      John