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Differences Between Medicaid, Medicare, and Individual Health Insurance Driving Health Costs Up

2012 January 6
by Tim Thompson

A new flyer from Anthem Blue Cross reports on the reasons why health care costs have increased.  One of the key pieces involves the difference in reimbursement rates between Medicaid and Medicare and Individual Health Insurance plans.  Medical doctors get paid less for Medicare patients, and even smaller amounts for Medicaid patients, so they recoup those costs by getting higher reimbursements from individual health insurance companies.  The cost shifting is estimated to add 10% to  the rising health care costs in this country.

This cost shifting effect is most noticeable in hospital billings. Uninsured patients that come to the hospital emergency rooms for care, usually wait until they are seriously ill. This requires the hospitals to spend more time, effort, and money to help them. However, the bill for these patients is usually never paid for.

Because of these un-reimbursed costs, hospitals negotiate higher reimbursement rates from health insurance companies to offset the lower compensation they receive for uninsured, Medicaid, and Medicare patients. Thereby passing the cost to provide care to these patients onto the backs of individual health insurance and group health insurance plan members.

The hope is that health care reform will help to ease the cost shifting pressures by ensuring that everyone has health insurance. Only time will tell if this plan works.


Stay tuned for more updates as they happen.


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