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Allen Dobson, Joan DaVanzo, and Namrata Sen The Cost-Shift Payment ‘Hydraulic’: Foundation, History, And Implications Health Affairs, January/February 2006; 25(1): 22-33. [Abstract] [Full Text] [Figures Only] [PDF] [Reprints & Permissions]

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Why Private Payers Accept Cost Shifting

John Grima   ( 11 January 2006 )

Why Private Payers Accept Cost Shifting 11 January 2006
John Grima, Director of Planning McKay-Dee Hospital, Ogden, UT Send comment to journal: Re: Why Private Payers Accept Cost Shifting j.grima{at}comcast.net John Grima	There are at least three reasons that private payers' acceptance of cost shifting is economically rational: (1) They get a tax break on premiums, which shifts part of the cost to other taxpayers, so it costs less than it might. (2) They perceive that they receive a premium product. They get access to the second and better tier of our tiered health care system, for example, in the form of appointments with physicians who might not "take" Medicare or Medicaid. If they fail to provide for Medicare and Medicaid, they might have to use a single tier public system, and there is an elaborately constructed folklore around the horror of that. (3) They help ensure provision for future and alternative benefits for themselves -- they will someday be Medicare users; they may someday need Medicaid or charity. To the extent that their cost-shift premiums are necessary to the retention of these safety-net services, they are reasonably spent, insurance against loss of private insurance.