Cost shifting steady from 1970 through 2008…but now what?

The Insure Blog makes an interesting comparison, looking at Milliman’s 2008 cost shift research alongside a 1970 article from the Atlantic by Michael Crichton (yes, that Michael Crichton). Here’s the blog’s comparison:

You’ll find the cost-shift mentioned toward the end of this article, just click to page 4 and read the author’s 4th and 5th conclusions. He calls the cost shift “welfare reimbursements”. The amount in his analysis is $10.00 added to the daily hospital cost of $60.00, resulting in a total billed charge of $70 per day (remember this was 40 years ago) – – in other words, the need to recover federal cost underpayments in 1970 resulted in a daily hospital charge 16% higher than it would otherwise have been. Remarkably, just about the same as Milliman finds today.

We’ll offer a couple other relevant resources that advance the discussion of cost shifting. More recent analysis indicates that some hospitals are doing a good job of not shifting costs in inpatient environments. More detailed data concerning commercial regional variation also adds to the story. With reform introducing new dynamics, cost shifting may simply cease to be an effective strategy.