Cost shifting refers to the practice of increasing the price or markup charged to one group of patients in response to a decrease in another group’s price or markup.
Cost shifting refers to the practice of increasing the price or markup charged to one group of patients in response to a decrease in another group’s price or markup. Cornerstone Research worked with Professor Daniel Kessler of Stanford University on a study titled “Cost Shifting in California Hospitals: What Is the Effect on Private Payers?” that analyzed the extent of cost shifting from public health plans and the uninsured to private health plans.
The study found that cost shifting at California hospitals from Medicare and Medi-Cal to private health plans was substantial.
Commissioned by the California Foundation for Commerce and Education, the analysis relied on healthcare databases and applied econometric analysis to investigate the relationship between hospital reimbursements from private payors, public payors, and the uninsured. The study found that cost shifting at California hospitals from Medicare and Medi-Cal to private health plans was substantial—increasing reimbursement by these public health plans to cover patient costs would lead to a decline in the markup paid by private payors of almost 11 percentage points.
