Unbiased Analysis of Today's Healthcare Issues

The End of Hospital Cost Shifting?

Medicare is cutting reimbursement to hospitals.  Austin Frakt (HSR 2013) gives some highlights findings from a CMS report: [The ACA] will permanently reduce the Medicare payments hospitals would otherwise receive. Its ‘productivity adjustment’ will scale payments downward by the average rate at which private nonfarm businesses’ productivity increases. That rate has been estimated to be […]

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Do hospitals cost shift?

Many health policy experts claim that hospitals engage in cost shifting. Cost shifting assumes that hospitals have some target profitability level and can demand is fairly inelastic.  Thus, if public programs (i.e., Medicare or Medicaid) cut prices, hospitals ‘cost shift’ by raising prices to the privately insured in order to reach their target profitability level. […]

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A Tale of Two Bounties: Can Physicians Cost Shift from Medicare to Private-Pay Patients

Do physicians cost shift after Medicare reduces reimbursement rates?  A paper by Rice et al. (1999) examines whether or not this in fact occurred after Medicare reduced payment for surgical procedures in the late 1980s.  To be more specific, “The Omnibus Budget Reconciliation Act of 1989 (OBRA-89) reduced Medicare physician payment rates for thirty-six groups […]

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Do Hospitals “Cost Shift” to the Privately Insured when Medicare Reduces Prices?

Many health policy experts believe that when Medicare or Medicaid decrease prices, hospitals will increase the prices they charge to the privately insured. Does this make sense?  Ginsburg (2003) summarizes the debate: Most executives in hospitals, physician organizations, health plans, and businesses have long been convinced that reductions in rates paid to Medicare and Medicaid […]

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