The Medicare Cost Shift to Private Plans

This report is from Milliman. Milliman reviews claims data and provides analysis. Over the last several years there has been Medicare funding cuts in the federal budget. Well, when that money is cut from the budget hospitals and providers have to make it up from private plans. This is called cost shifting. There is no negotiating with Medicare. Doctors and Hospitals have to accept these below market reimbursement rates. So when you hear someone say if we had a single payer, the US would save 30%. If that would happen we would see a reduction in wages for doctors, nurses, staff, and hospitals. Hospitals would operate at a deficit. People will see rationing because in this type of system you have no choice and no voice. Hospitals and doctors will ration care based on the payment reductions. Obama calls these efficiencies. Remember, as much as we would like to say that Healthcare is not a business, we do have cover costs. Profits fund new technology, expansion, and staff training to name a few things. The other aspect that gets lost is the innovation of the US medical system. We support the world with innovation.

Here are items that you need to take into consideration with the public option and why it would lead to a single payer system.
1. Medicare cost shifts 30% to private plans and public option would be set at Medicare rates. So we will see more cost shifting. The gap between premiums would grow.
2. Taxes for private insurance would not be in the public option. This makes the public option cheaper. Since these taxes go to fund Firehouses, schools, social programs, etc where will the legislators go to find a new source of tax revenue.

3. The public plan would not have to provide state mandated benefits which increase the cost. Some of the mandates are Autism coverage, Diabetic Supplies, IVF, and others.
Our system may not be perfect but we do have a voice and choice. Please take a look at the report on Medicare Cost Shifting.

Milliman Report on Medicare Cost Shift

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