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Cuts to Medicare trim costs to insurers

Politico, May 8, 2013

When Medicare payment rates for hospital inpatient care are cut, do insurers end up paying more? A new study published Monday in Health Affairs finds they don't — contradicting the well-known "cost shifting" theory. And the study contends that doing away with the health care law's cuts to Medicare payment rates would actually make insurers' costs increase more quickly. Chapin White, a senior health researcher at the Center for Studying Health System Change, analyzed data on payment rates from 1995-2009 and found a widening gap between Medicare rates and private rates. Medicare had an average annual growth rate of 3 percent while private insurance grew more quickly — at 3.56 percent — he found.