Cost Shifting on the Increase under Obamacare

Daniel Graulich / August 01, 2011

In a recent article in Health Affairs, health economist James Robinson reveals that in areas where hospitals consolidate and enjoy a larger market share, providers are more likely to charge higher prices, as low competition gives them a monopoly in delivering patient care in the region.

The lack of competition allows hospitals and other providers to raise the sticker price for the privately insured as reimbursements from Medicare and Medicaid fall. Economists call this “cost shifting,” when a lower payment from one group is made up for by a higher payment from another group. The study finds that the growing trend in hospital consolidation is to charge private payers more to make up for public payers’ lower reimbursement levels. (more…)