Medicaid was founded on July 30, 1965, when President Lyndon B. Johnson signed the Social Security Amendments of 1965 into law. This legislation established both Medicare and Medicaid as federal health insurance programs for eligible individuals.
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In US healthcare, cost shifting refers to the practice where hospitals and other healthcare providers raise their prices for patients with private insurance to offset losses incurred from providing services to patients covered by public programs like Medicare and Medicaid. This practice has been a topic of debate and analysis for decades, with concerns about its impact on both patients and the overall health system.
Early Concerns and the Rise of Insurance:
Pre-1960s: Before the establishment of Medicare and Medicaid, the healthcare system was largely privately funded, with a mix of self-pay and private insurance.
1960s: The creation of Medicare and Medicaid in the mid-1960s significantly altered the landscape, introducing government-sponsored healthcare for the elderly and low-income individuals. This shift led to concerns about hospitals potentially shifting costs to private payers to cover underpayments from public programs.
1970s: During this decade, commercial insurers began expressing worries about hospitals potentially increasing their prices to patients who paid charges to compensate for tighter cost-based reimbursement from the government.
The Debate and Evidence:
Proponents of cost shifting argue that it's a necessary mechanism for hospitals to ensure financial viability, as public programs often pay less than the actual cost of services.
Critics of cost shifting argue that it leads to inflated prices for all patients, including those with private insurance, ultimately increasing overall healthcare costs and potentially hindering affordability.
Research on cost shifting has been mixed. Some studies suggest that hospitals do indeed engage in cost shifting, while others find limited evidence of this phenomenon.
Factors influencing cost shifting: The extent to which hospitals can shift costs is influenced by the availability of alternative healthcare providers, the bargaining power of insurers, and the overall market structure.
Contemporary Concerns and Ongoing Debate: Continued debate about cost shifting: Despite various studies and analyses, the issue of cost shifting remains a contentious topic in healthcare policy discussions.
Impact of the ACA: The Affordable Care Act (ACA) has also been debated in the context of cost shifting, with some arguing that the ACA's expansion of coverage could exacerbate the issue.
Moving towards value-based care: Recent trends in healthcare, such as the shift towards value-based care, may help address some of the concerns associated with cost shifting by focusing on quality and efficiency.
Public payment policies: Ongoing policy debates about public payment policies, such as Medicare and Medicaid reimbursement rates, continue to influence the issue of cost shifting.
Contemporary Concerns and Ongoing Debate:
Continued debate about cost shifting: Despite various studies and analyses, the issue of cost shifting remains a contentious topic in healthcare policy discussions.
Impact of the ACA: The Affordable Care Act (ACA) has also been debated in the context of cost shifting, with some arguing that the ACA's expansion of coverage could exacerbate the issue.
Moving towards value-based care: Recent trends in healthcare, such as the shift towards value-based care, may help address some of the concerns associated with cost shifting by focusing on quality and efficiency.
Public payment policies: Ongoing policy debates about public payment policies, such as Medicare and Medicaid reimbursement rates, continue to influence the issue of cost shifting.
Norb Leahy, Dunwoody GA Tea Party Leader
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