Health Care Cost Shifting

This morning after listening to 96.9's discussion about State Senator Kathleen Sgambati (D) pushing to rewrite history and make documents like our state Constitution gender neutral in it's text (despite the fact that both men and women are equally covered) I went looking for more information about the story.  In doing so I stumbled on an article on the Blue Hampshire website that for once gets it right, of course Democrats being who they are eventually come to the wrong conclusion but I'll get to that.  The main point being, not that they came to the wrong conclusion but for once they recognize a problem that they themselves are helping to create.

You can read the article in full HERE, but here is the key eye opening revelation:

Shira Schoenberg, at the Concord Monitor, is continuing to report on the effects of recent cuts to the state's Health and Human Services Budget. These are manifold, but one that is not generally understood, except by the wonks among us, is the cost shifting that occurs when the state and federal Medicaid/Medicare reimbursement rates fall below the level of what it costs hospitals, clinics, doctors, nursing homes, to  provide  care.

Now we can quibble as to whether that cost is justifiable or not, but that is another conversation. Presently, services cost what they cost and when the reimbursement from the government side is lacking, the provider can do one of two things: refuse to care for patients who are insured via these programs (and some cannot do this), or take the difference between cost of care and reimbursement for these patients and shift it to privately insured people and self-payers by raising rates on them. This, of course, raises insurance premiums, deductibles, co-pays, etc. because the for-profit insurance industry will not take the hit, and cause more health care related bankruptcies, homelessness and general poverty.

This is a point I've argued for quite a while now, that if you force a service to be provided and you do not give the full amount for the service, the person or company providing that service will recoup the loss elsewhere.

We see this not just in the example Blue Hampshire raises above but elsewhere in the medical industry as well.  Drug companies that spend millions developing new drug treatments are told by governments such as Canada how much they are allowed to sell their product for.  Since they are forced to take a loss there, they in turn must sell higher in other countries such as the USA.

As I said though, Democrats being who they are of course come to the wrong conclusions.  The article goes on to use this to justify government spending and argue against budget cuts.

What is ignored is what is causing the costs to go up in the first place.  Any time government gives money it includes strings with that money.  Regulations and rules that must be followed and as a result of following them, costs go up.

The other bit of irony they completely ignore is the very title they used for this article.  "Cost Shifting: Cutting Peter and Making Paul Pay More".  What's ironic about this that they completely miss is that it's Paul's money that's being used to pay for Peter in the first place.  So what's really being discussed here is whether more money should be taken from Paul to pay for Peter directly or if less money should be taken via taxes and Paul should just pay more when he uses the doctor.  Either way you look at it Paul ends up being the one who pays, but they don't understand that.

The only real solution here is to lessen the regulations that increase the costs in the first place so both Peter and Paul can afford to pay their own way without taking money from the other.