Truth be told, I sat down early this morning to write another post about racism, but I needed to clear this out of the way.
I’ve been remiss in not posting some cost shifting claims, counter-claims, and related. Here’s the long awaited update. For anyone new to my writing on cost shifting, see these ~80 prior posts (perhaps start here).
From a March 5, 2020 Colorado Sun story on the state’s public health insurance option bill:
The bill also gives the insurance commissioner new authority in other areas of the health insurance market. The commissioner would be able to deny any proposed insurance rate “that reflects a cost shift” between the public option and other plans. In other words, if a hospital tries to make up for its lower revenues under the public option by charging insurers more for people covered by other plans, the commissioner will block it.
Cost shifts are driven by strategic hospital decisions, not by shortfalls from public insurance. The increased funding generated by public, taxpayer funded programs — which are intended to reduce private insurance premiums and out-of-pocket costs — are not being passed along to health care consumers and employers. Health First Colorado (Colorado’s Medicaid program) has steadily increased payments year-over-year since 2009. Hospitals could have been passing on significant savings — from the reduction in charity care and the increases in Medicaid payments — to commercial insurance consumers and employers if they had matched national cost benchmarks. Instead, Colorado has far exceeded those cost benchmarks to the disadvantage of consumers and employers.
From an analysis published on March 2, 2020 by the American Action Forum:
To make up for the shortfall in payments from Medicare and Medicaid, hospitals must negotiate higher payments from private insurers. For example, the Congressional Budget Office found that private insurers reimburse at rates 89 percent greater than Medicare, on average. Similarly, the RAND Corporation found even greater disparity between Medicare and the private market, with private plans reimbursing at 241 percent of Medicare rates in 2017.
A tweet by Avik Roy on May 10, 2019:
Way back when, I used to subscribe to the cost-shifting thesis. But the overwhelming evidence is that hospitals make up their cost figures, and charge higher prices to the privately insured because they can. @Afrakt has been right on this all along.
— Avik Roy (@Avik) May 10, 2019
That is all.