Future of Cost Shifting Depends on the Little Guy

Philip Betbeze, for HealthLeaders Media , January 20, 2012

I pointed out to her that most Americans are not employed by a Fortune 500 company with the infrastructure to do things like this, and that I remain unconvinced that cost shifting is dead or even nearly so.

Why? Because increasingly, it's not just large, organized entities like Lowe's or Pepsi that have discovered the problem. Small employers have too. And rather than take the paternalistic route, they've elected to let their employees feel some of the pain.

Largely, that group doesn't understand that the gobs of cash departing their bank accounts whenever they darken a hospital's front door go toward such an inefficient and unfair system. I can tell you this is true from recent personal experience.

Cost shifting over the long term doesn't work in any industry. But as I learned in economics 101, the short term can still last a very long time. I think we're far from the end of the cost shift in general, even if employers have largely gotten wise to the game.

As we chatted over email, my critic and I came to agreement on that score, at least. She conceded that her payroll deduction for healthcare costs has tripled over the past four years and her out-of-pocket costs have increased dramatically as well.

Where does she work?

A Blues plan.

Philip Betbeze is senior leadership editor with HealthLeaders Media.
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2 comments on "Future of Cost Shifting Depends on the Little Guy"

Ken Justinstine (1/23/2012 at 5:16 PM)
When one customer says I'll only pay half of what everyone else pays (with no ability to negotiate), you either reject it and don't take him as a customer; or you accept it, and shift the burden you have to achieve positive margins onto higher paying customers. While the hospitals share some blame with their high cost structure, the government with their money-losing reimbursement structure is the main culprit. Healthcare will look very different as hospitals adjust to the ever-declining reimbursement rates of the future.

JKuriyan (1/20/2012 at 11:45 AM)
Cost shifting is just an excuse for hospitals to gouge vulnerable small employers and individuals. Health plans also take advantage of this segment by preventing formation of health insurance purchasing groups. As James Carville explained a dog's unusual trait "they do it because they can!"




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