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The enduring myth of cost shifting

Commentary: don't believe insurers' line that federal cuts are boosting our costs

Columnist Wendell Potter Robin Holland

Columnist Wendell Potter Robin Holland

by Wendell Potter
The Center for Public Integrity, March 30, 2015

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.”

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