COMMENTARY AND QUESTIONS:
Chapter 6 of your textbook discusses cost shifting, which is a mechanism common to health care providers whereby they charge certain payment categories of patients more than others in order to make up for revenue shortfalls from government payers such as Medicare and Medicaid. Typically, it is the patient with commercial insurance (Blue Cross Blue Shield, Cigna, etc.) and the private pay patient (e.g., no insurance) who are charged the most and who pay the most. With the emergence of high deductible health plans, in which a patient’s deductible may be as much as $5000 with an additional High out-of-pocket co-payment percentage, patients are incurring higher out-of-pocket expense than in prior years.
Hospitals, physicians and other providers that treat a high percentage of Medicare and Medicaid patients claim that cost shifting is necessary to make up for the decreased amounts paid by these governmental payers. They rely on the insured and uninsured paying higher charges in order to recoup the decreased profit margins from governmental payers. The effect of cost shifting hits the uninsured patient especially hard. Some states such as Colorado and Maryland have laws prohibiting cost shifting.
Another inequity in health care financing is that health insurance companies negotiate discounts with health providers based on the number of lives insured. A larger health insurance plan is able to negotiate a more heavily discounted payment rate with the provider than is a smaller health insurance plan. The inconsistent result of the negotiated discounts practice is that the provider charges less for certain patients based on their insurance carrier. However, almost all insured patients receive discounts that are passed along to the patient in the form of lower cost-sharing amounts. The private pay patient receives no discounts at all, thereby paying the most of any patient category because they pay full charges (which are inflated to counteract the discounts).
Please consider the following questions:
(1) Do you have ethical concerns with the payment system described above? If yes, is your ethical concern with:
(A) The provider charging patients different amounts for the same service,
(B) insurance companies wielding their market power to strong-arm the provider to accept reduced payment for certain categories of patients,
(C) the government not paying its fair share for Medicare and Medicaid patients, and/or
(D) the uninsured patient paying the highest charges of all (which includes not only higher charges for the same service, but charges that are not discounted through insurance plan / provider negotiated discounts)?