Contrary to popular belief, Medicare spending is not spiraling out of control, writes Princeton economics professor Uwe E. Reinhardt in a New York Times column.
Rather, he says for most of its more than 40-year history Medicare payment rates have grown more slowly than private payors', with exceptions for the early years after it began to cover prescription drugs last decade and when insurers first introduced cost-saving managed-care plans in the 1990s.
Among his arguments in favor of Medicare's tempered spending growth, Mr. Reinhardt challenges those who claim providers in effect shift the cost of care to higher-reimbursing private insurers as a result of lower reimbursement from Medicare. He disagrees with the cost-shifting hypothesis, claiming instead that providers' practice of charging private payors more is purely profit-maximization — charging more of those who can pay more, and less of those who are less profitable.
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Rather, he says for most of its more than 40-year history Medicare payment rates have grown more slowly than private payors', with exceptions for the early years after it began to cover prescription drugs last decade and when insurers first introduced cost-saving managed-care plans in the 1990s.
Among his arguments in favor of Medicare's tempered spending growth, Mr. Reinhardt challenges those who claim providers in effect shift the cost of care to higher-reimbursing private insurers as a result of lower reimbursement from Medicare. He disagrees with the cost-shifting hypothesis, claiming instead that providers' practice of charging private payors more is purely profit-maximization — charging more of those who can pay more, and less of those who are less profitable.
More Articles on Medicare Spending:
GOP Representative Unveils Bill to Repeal PPACA's Cost-Cutting Board
10 Major Takeaways From CMS' FY 2012 Financial Report
13 Recent Medicare, Medicaid Issues