Report looks at growing health care cost shift

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(Host) A new report says businesses and private insurance companies are paying a larger share of state health care programs.

The report looks at the growing cost shift. That’s the difference between what the government pays, and the actual cost of care.

VPR’s John Dillon reports:

(Dillon) Hospitals and insurance companies have complained for some time that the government doesn’t fund the full cost of its health care programs.

In the last legislative session, lawmakers called for a close look at the numbers. Jeanne Keller is a health care policy analyst who served on the cost shift task force.

(Keller) “The amount that hospitals charge to the private insurance payers to make up for under-payment by government has been an almost exponential curve for the last seven years.”

(Dillon) The task force report says the cost shift for Medicaid programs alone is about $90 million. That’s up from $26 million in 2001.

Keller has consulted for business groups, and she says the cost shift should really be called a tax.

(Keller) “The Legislature promises these benefits to people, doesn’t appropriate money to pay for it, but just basically there’s a tacit understanding that the hospitals will charge everybody else more. Those charges show up at the insurance companies’ door. The insurance companies collect more premiums from us to make up the difference. It’s a premium tax, pure and simple.”

(Dillon) The cost shift adds to the bills for people who can afford to pay. Health insurance premiums are going up this year. And the cost shift task force estimates that about 14% of the overall increase may be from the growing cost shift.

State officials are well aware of the cost shift, and the pressure it creates for business and private insurance. Joshua Slen directs the state’s Medicaid programs. He says the state will raise Medicaid reimbursements for doctors and hospitals by about 3 and a half percent next year.

(Slen) “One of the administration’s priorities is to look at the cost shift on an annual basis and to the extent that resources permit to allocate dollars toward reimbursement increases as part of an overall strategy that is not targeted solely at the cost shift issue but also at improving access to care.”

(Dillon) Slen says that while it’s true that some of the costs for covering Medicaid patients get passed on to other payers, it’s not fair to call the cost shift a hidden tax.

(Slen) “This is the way the system has been built over time, and no one intended to hide the true cost of the system. In fact, we go to great lengths to figure out what those true costs are and to publish them.”

(Dillon) He says officials have documented the cost shift for years, and are trying to find ways to ease it.

For Vermont Public Radio, I’m John Dillon in Montpelier.

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