Feds Caused Medical Cost Shifting

Today the Rocky Mountain News sorta kinda praises “Gov. Bill Ritter’s proposal to expand medical coverage by leveraging new fees on hospitals.” The paper summarizes:

[A] well-designed plan could ease some of the cost-shifting that occurs when patients who require care and can’t pay their bills show up at emergency rooms and doctors’ offices. And cost-shifting results in private health insurance premiums rising much faster than they should.

Under the plan, hospitals would pay fees to the state based on the number of beds occupied or the days patients are admitted. These fees would then be leveraged with a dollar-for-dollar match from the federal government.

But why is this a problem in the first place? It is a problem because the federal government forces hospitals to treat people without compensation. Imagine a federal law that required grocery stores to hand out food, for free, to anyone claiming to need it; that would result in “cost-shifting” in food. On a free market, many health-care providers would negotiate lower prices based on need, and charities would help cover those unable to pay the bills. But the federal law interrupts these voluntary solutions and forces some to pick up the tab of others, whether they can afford it or not.

This is a classic case of the federal government trying to solve a problem (with Ritter’s help) that the federal government created.