For example, reimbursement rates vary by state so just looking at the national cost shifting is misleading. Also, Medicare and Medicaid have a variety of reimbursement methods including extra payments for teaching hospitals and Disproportionate Share Hospital payments that aren’t included in this study.

And the government might pay less for services but it also gives hospitals gigantic tax breaks, and, in the case of hospitals like UNC, actually appropriates money to them to help cover expenses.

I believe private insurance companies have contributed significantly to this situation by the approach they’ve used for contracting with hospitals, doctors and other health care providers. Instead of negotiating reimbursement rates designed to cover costs plus a reasonable profit margin, the private insurers approach is to negotiate rates to support whatever insurance premiums they feel the ‘market’ would bare. The ‘market’ being employers, individuals and other entities who buy their health insurance products.

So you’re saying that private sector, for-profit doctors should simply be allowed to list a fixed cost, add in a comfortable profit margin, and insurers should blindly pay the total, even it the businesses/individuals who fund the system can’t possibly afford it? Clearly, you’ve never spent a nanosecond working in the private sector. That just ain’t how it works.

Doctors’ offices, like any other business, compete for finite resources. In my experience, doctors rarely know what their services (or those they recommend) actually cost, which is part of the reason that medical inflation is so out of control. The pretense that health care dollars are infinitely elastic is clearly over. Either doctors learn to compete on both cost and quality or we’ll face draconian rationing that limits services to pay the same fees to both efficient and inefficient doctors. Is that REALLY the system you want?

However, I think you missed the mark a bit with respect to your commentary on “government programs don’t impact the cost of private care”.

The underlying premise of the Milliman study sponsored by the America’s Health Insurance Plans, the American Hospital Association, the Blue Cross Blue Shield Association, and Premera Blue Cross, is to try and convince us that if Medicare and Medicaid paid their fair share, it would go a long way toward solving the access to health care problem we have in this country.

Hogwash.

The US already spends significantly more than many other industrialized countries. And we certainly have nothing in the way of better outcomes to show for it.

According to this 2008 Commonwealth Fund report – “Why Not the Best? – Results from the National Scorecard on US Health System Performance, the U.S. now ranks last out of 19 countries on a measure of mortality amenable to medical care, falling from 15th as other countries raised the bar on performance. Up to 101,000 fewer people would die prematurely if the U.S. could achieve leading, benchmark country rates.

http://www.commonwealthfund.org/Content/Publications/Fund-Reports/2008/Jul/Why-Not-the-Best–Results-from-the-National-Scorecard-on-U-S–Health-System-Performance–2008.aspx

I believe private insurance companies have contributed significantly to this situation by the approach they’ve used for contracting with hospitals, doctors and other health care providers. Instead of negotiating reimbursement rates designed to cover costs plus a reasonable profit margin, the private insurers approach is to negotiate rates to support whatever insurance premiums they feel the ‘market’ would bare. The ‘market’ being employers, individuals and other entities who buy their health insurance products.

Whenever I consider the various methods and tactics proposed for health reform, I ask myself if they will lead to better outcomes. And the answer so far has been ‘it’s hard to tell’.

I do believe a public option designed to compete against private insurers is probably a good first step. Insurers need to be held accountable for what they’ve contributed to this bloated, dysfunctional health care delivery system we have today.