Health Care Cost Shifting
Tuesday, February 9, 2010 at 09:06AM 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.
health care in Health
Reader Comments (9)
You write:"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 someone who works in the pharmaceutical industry, I am sorry to tell you that the above statement indicates you have a complete lack of understanding about this issue and this is right wing rhetoric at its worst.
Price regulation in foreign markets have no effect on pricing set in the US. Millions of dollars to develop a successful drug is a "drop in the bucket" for big pharma. The untold story is the amount of money that is spent on drugs that never make it to the market. Open a magazine or turn on the TV and look at all of the advertisements bombarding people to "pull" the drug from your doctor and create "demand". That does not come cheap. BTW, direct to consumer advertising is illegal in Canada. Coincidence? I think not.
Barnes: Believe me, if company X was losing money selling drug Y in country Z, they would pull that drug from the market in country Z. The US is not subsidizing country Z's consumption of drug Y. You seem confused about this issue. It may be because this discussion a little above your pay grade.
Your rightwing co-ideologues will disagree with your comment: "The only real solution here is to lessen the regulations that increase the costs." That's only half the solution. You forgot to add "and lower taxes on these wealthy companies". Remember, there is no problem that cannot be solved if we just cut taxes on the wealthy. Says so right in the Bible.
Pat
http://kyl.senate.gov/legis_center/rpc/rpc_110603.pdf
That's a government study backing up exactly what I'm saying. One country controls prices and another (the US) has to pick up the additional costs.
Perhaps Sen. Kyl's report would be a little more credible if he hadn't accepted so many contributions from the pharmaceutical industry and health professionals. He is consistently a top ten senate recipient of money in these sectors.
http://www.opensecrets.org/politicians/industries.php?cid=N00006406&cycle=Career
http://www.cardiovascularbusiness.com/index.php?option=com_articles&view=article&id=16637:congress-scrutinized-for-payor-pharma-donations
From KC,
Aside from your resume and your name calling, you have not supplied any information that refutes the above claims. Rather than shooting your mouth off and parroting catchphrases from Rush, Hannity, and their ilk, perhaps you can provide something useful to the conversation? Of course, seeing as you are in marketing, perhaps that is not possible. ;-)
Please leave the site, we don't need moonbats.
This is not just a theory that can be disputed, it's a fact of basic economics.
And what do you come back with? You attack the messenger of the government report I supplied while ignoring the facts within it.
How am I attacking the messenger by pointing out Sen Kyl's sources of campaign contributions? That's not an attack. I should also point out that the report you posted has several references from the conservative American Enterprise Institute, as well as Mark B. McClellan, the Bush appointed FDA commissioner.
There is one problem with your "fact" of basic economics. While pharma is selling their products in other nations that regulate prices, they are not selling these products at a loss or at no profit margin. Therefore, what do they have to "make up" in the US?
From the report you cite:"Prices are determined by several factors. One is the
cost of government regulation. Second is the cost of R&D, marketing, and distribution."
US has looser regulations. Thus, pharma can set higher prices. Additionally, the second factor they list is price for R&D, MARKETING, and distribution. Please see my original post for the correlation.
Sorry Mr. Barnes, but the report is more political that factual.
Here's a report showing the problems of price regulations by the CATO group:
http://www.cato.org/pubs/regulation/regv24n1/morton.pdf
Every time the government (ANY government) has started regulating prices it has lead to further problems.