The enduring myth of cost shifting
Health insurance executives and lobbyists have for years told us that one of the main reasons they charge us so much for coverage is the cost shifting that results from Uncle Sam’s stinginess.
The story goes like this: hospitals are paid so inadequately by government programs like Medicare and Medicaid that they have to charge private insurers more to keep their doors open.
One of the regular communicators of this theory is Karen Ignagni, CEO of America’s Health Insurance Plans, the industry’s biggest PR and lobbying group.
Ignagni pushed this line incessantly during the health care reform debate. She even cited it in response to a question about why the industry was so opposed to the creation of a government-run “public option” health plan.
“What we have is a significant amount of cost shifting because the government underpays,” she said. “Our [premium] rates are higher as a result of that. If you set up a public structure, whatever you call it, and it has the benefit of government rates, we are still being disadvantaged because of the cost shifting.”
A few months later, on March 23, 2010, to be precise, the day President Obama signed the Affordable Care Act, Cigna CEO David Cordani, predicted that cost shifting was only going to get worse because of the new law. He was quoted as saying that the “cost shift from Medicaid to private insurance would worsen as millions of eligible people are added to the Medicaid rolls.”
Three years later, Ignagni was still blaming cost shifting for higher premiums. In a 2013 speech she stated that, “In the past, when governments reduced reimbursement rates for Medicaid and Medicare, private insurers have generally paid more to make up for it.”
Health care executives have talked about cost shifting for so long it has become conventional wisdom. We’ve all come to believe it without challenging it.
But what if it hasn’t really been happening, at least not in recent years?
There’s more to this story. Click here to read the rest at the Center for Public Integrity.
This story is part of Wendell Potter commentary. Former CIGNA executive-turned-whistleblower Wendell Potter writes about the health care industry and the ongoing battle for health reform. Click here to read more stories in this blog.
Copyright 2014 The Center for Public Integrity. This story was published by The Center for Public Integrity, a nonprofit, nonpartisan investigative news organization in Washington, D.C.
