Leadership
e-Newsletter
Intelligence Unit Special Reports Special Events Subscribe Sponsored Departments Follow Us

Twitter Facebook LinkedIn RSS

Future of Cost Shifting Depends on the Little Guy

Philip Betbeze, for HealthLeaders Media, January 20, 2012

Depending upon whom you ask, it's either a time-honored tradition or a dirty little secret. If you have commercial health insurance coverage, at some point or another, you've been paying for the shortfall in reimbursement from state and federal governments, whose Medicare and Medicaid programs, and thus the people they represent, pay less than you do for the same services and goods. Most of us continue to do so.

Actually, I don't think it's either a time-honored tradition or a dirty little secret. It's neither. It's politics and its little brother, economic distortion, at work.

Whether or not you are actually worse off for the practice is debatable. Assuming most of the beneficiaries of commercial insurance coverage are employed (other than dependents), you are also a taxpayer—so in theory, you're getting a break on one side and paying for it on the other.

But there's a big debate going on about how long these general subsidies can continue, given that healthcare costs continue to rise faster than the rate of inflation, and more importantly, that employers have gotten wise to the game.

None of this is any news to you if you're on the senior leadership team at a hospital, health system, or physician practice. In fact, it's a fact of life, and you're darn lucky it still continues, in a way.

1 | 2 | 3

Comments are moderated. Please be patient.

2 comments on "Future of Cost Shifting Depends on the Little Guy"


Ken Justinstine (1/23/2012 at 5:16 PM)
When one customer says I'll only pay half of what everyone else pays (with no ability to negotiate), you either reject it and don't take him as a customer; or you accept it, and shift the burden you have to achieve positive margins onto higher paying customers. While the hospitals share some blame with their high cost structure, the government with their money-losing reimbursement structure is the main culprit. Healthcare will look very different as hospitals adjust to the ever-declining reimbursement rates of the future.

JKuriyan (1/20/2012 at 11:45 AM)
Cost shifting is just an excuse for hospitals to gouge vulnerable small employers and individuals. Health plans also take advantage of this segment by preventing formation of health insurance purchasing groups. As James Carville explained a dog's unusual trait "they do it because they can!"