Is There A “Cost Shift” from Cutting Medicaid?

One zombie that just will not die, no matter how many stakes are driven into it, is the argument that the health care “crisis” is driven by hordes of uninsured people who crowd the ERs for “uncompensated” care, shifting a so-called “hidden tax” onto people with health insurance.

This is the fallacious argument that launched the out-of-control Massachusetts “reform”. It also motivated Gov. Schwarzenegger to waste a year advocating “universal” health care, which in turn caused me to debunk the “hidden tax” in a study last January.

Budget realities brought the governor back to earth. Rather than expanding government-run health care, he’s got to pare it back, by tightening eligibility and payments for Medi-Cal (Medicaid). Unsurprisingly, those who expound the “hidden tax” are back on the warpath. Now, the fact that some folks will be ineligible for Medi-Cal, and providers will earn less money from them, will be responsible for a new “hidden tax” of $290 annually. According to a new report by the advocates of “universal” health care, this is the amount that hospitals will have to “shift” to privately insured patients to carry the costs of more uninsured.

But don’t panic: This estimated $290 cost shift will be added to an average total premium of $13,998. That’s right: all that analysis for a meager 2 percent cost shift! Well, that’s more than zero. However, the folks at Health Access California are trafficking this cost shift only because they want an actual tax hike to restore the break-neck growth of government dependency in health care – not necause they’ve figured out a way to control costs.

It seems to me that they continue to learn the wrong lesson. If Blue Shield, Blue Cross, Health Net, Cigna, or Aetna went bankrupt, as our state basically is, would Health Access California argue that the taxpayer should bail them out? Surely not, so why should we bail out a state health care program that has proven, again and again, that it cannot serve the interests of either patients or providers?

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

Scroll to Top