Thursday, July 23, 2015

Cost-Shifting: The Hidden Tax Employers Pay to Compensate for Government Underfunding in Medicare and Medicaid (& Now PPACA), Study

This if from Health Care Trends in a study focused on the state of Wisconsin:
  • Federal and state payments for hospital care do not cover the cost of providing those services.
  • Wisconsin hospitals would have to lay off more than 10,000 employees and cut an additional $750 million in operating costs in order to remain financially viable at government reimbursement rates; this would severely impact the quality of care hospitals provide.
  • In order to offset the underfunding, hospitals must reduce operating costs and increase the revenue they receive from private payers more for the same medical services; this process is commonly known as cost shifting.
  • In southeastern Wisconsin, cost shifting is responsible for 35 percent of the overall commercial rates paid.
  • Cost shifting is a hidden tax on employers that affects their ability to compete economically; it has a greater impact on smaller employers, which are the primary engine of job growth for the state.