Aaron just noted that in Rep. Ryan’s Path to Prosperity he cites (#21) an American Medical News article on cost shifting in support of this sentence: “For doctors who see Medicaid patients at below-market reimbursement rates, losses are shifted to non-Medicaid patients.” If by “losses are shifted” Rep. Ryan he is suggesting a causal shift of all or most of them, he’s wrong. Very, very wrong.
Turns out I published a thorough literature review on cost shifting last month. (Publication here. Ungated working paper here. Start of long series of posts on it here.) I believe I can state with confidence and credibility that I know a lot about this subject. All the scholars who reviewed my paper, both before and after submission to the Milbank Quarterly, agree with me. My conclusions are not controversial among those who have really studied this issue deeply and seriously. Here they are:
One should not expect that all or even half of every dollar trimmed from public program spending shows up in private prices or premiums. Far from it! If one is talking about hospital prices, perhaps a shift of 20 cents on the dollar is a justifiable estimate (which means far less than that ends up in premium increases). If one is talking about physician or pharmaceutical prices, the estimate is even lower, essentially zero. All one need do to back up such a point about hospital prices is cite my article, or my companion working paper in the case of physician prices.* It’s all there, carefully explained.
* For pharmaceuticals, see this prior post.