Saturday, June 29, 2013

It's not Cost Shifting, it's Plain Old Cost Raising.

In a May 13th article in the Indianapolis Business Journal, a Health Affairs study debunks a common belief among healthcare professional:

Rather than aggressively raising prices on private health insurers to make up for inadequate payments from the government, hospitals across the country—including in Indianapolis—have been raising prices just because they can, according to a new study.

The study finds that as Medicare costs rise, so do private insurer's costs. They move rather in tandem. But can this last forever?

ON THE ECONOMIST'S OTHER HAND...

An IBJ article from yesterday announces that St. Vincent's will cut 865 jobs, mostly from the administrative ranks. The cuts are chalked up to reimbursement cuts which are anticipated from Obamacare and other government budget cuts. It is also because the company which owns St. VIncent's, Ascension Health Alliance, wants to raise margins. (What happened to not-for-profit?)

Providers figured that Obamacare cuts would be offset by Medicaid Expansion and the decrease in the uninsured. But with many states not expanding Medicaid (including Indiana), that freshet of revenue will not develop.