Somewhat slower spending growth overshadowed by broader trends and other letters

Regarding the Feb. 25 editorial, slightly slower growth in spending than expected over the past decade doesn’t negate the larger issue. The focus needs to broaden.

Just because healthcare spending over the past few years has grown more slowly than we expected, that does not mean it hasn’t grown exponentially since the introduction of Medicare and Medicaid.

And it doesn’t dismiss the basic economic principle that price caps (imposed by the CMS) create market shortages and drive up prices elsewhere. Nor that Medicare and Medicaid (and private insurance) remove consumers so far from the actual costs that the market is never able to adjust toward equilibrium. Nor that without tax-funded entitlements, increased spending would not be a bad thing. In other industries we would call that a boom. And finally, it doesn’t mean we can ignore the fact that the population paying into the system is shrinking, and the population taking from the system is growing rapidly. Are we really sure that’s sustainable?

If you want to save the social safety net, the worst thing you can do is ignore the very thing that threatens it.

Joshua Naatjes
Madison, Wis.

The recent article “As value-based efforts lag, push for price regulation gains momentum” states that research generally has not found that lower Medicare and Medicaid payments produce a cost shift. We believe this is misleading. 

In fact, the story linked to a blog post about a recently released National Bureau of Economic Research (NBER) study (February 2018) that concluded, after its review of the literature, that evidence of significant cost-shifting is mixed. The NBER study authors, in their review of the literature, cite four studies in their introduction to “support the notion of cost-shifting” and cite the writer of the linked blog posts’ own review of the literature, which “concludes that cost-shifting, if it exists, is not widespread.”

 The NBER study authors specifically focused their analysis on the potential for cost-shifting in the case of hospitals faced with reduced Medicare payments due to penalties from the Hospital Readmission Reduction Program and the Hospital Value-Based Purchasing Program. They concluded that their “results suggest support for a modest degree of cost-shifting, where the change in (Medicare) payments for hospitals facing a net payment reduction was 1.5% higher than that for non-penalized hospitals.” Furthermore, the study abstract stated that for hospitals that faced Medicare payment reductions from the two programs, “cost-shifting is largest for hospitals with higher shares of private insurance patients.” The NBER study includes “roughly 50% of inpatient prospective payment hospitals in the United States from 2010 to 2015.”

 The blog post was written by a skeptic of the NBER study. The National Business Group on Health believes Modern Healthcare’s article would have been more accurate if it were written: research that lower Medicare and Medicaid payments produce a cost shift is mixed, not as the author stated. Furthermore, we believe that the article would have provided more value to your readers by linking to the actual NBER study.

Steve Wojcik
Vice president of public policy
National Business Group on Health