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Hidden Tax Takes a Toll, Distorting Health Care Financing

MANAGED CARE December 2006. © MediMedia USA
Editor's Memo

Hidden Tax Takes a Toll, Distorting Health Care Financing

John Marcille
MANAGED CARE December 2006. ©MediMedia USA

John Marcille

Hell, in one Sunday school version, is a huge banquet room in which the tables are overloaded with food, glorious food. Anything you can imagine, and a lot of what you can't. However, when the guests arrive, they find that their arms won't bend at the elbows. They spend an anguished eternity not eating.

Heaven, so the story goes, is an identical banquet room with an identical feast. The guests even have an identical handicap — they can't bend their elbows. But they spend eternity helping each other eat.

Health insurance is a business, and a fairly rough-and-tumble one at that. Turning the other cheek usually gets you slapped silly. However, today's sermon might contain a lesson even for you, Dr. Health Plan Official. That is, sometimes it just makes sense to help the other guy.

The other guy, in this case, being the hospital industry. Yes, you're embroiled in contract talks half the time. And yes, we know that as that industry has consolidated over the years, it has been prone to throwing its weight around.

However, as our cover story demonstrates, what Uncle Sam is doing to hospitals — underpaying them for Medicare and Medicaid services — isn't too nice either. As Contributing Editor MargaretAnn Cross points out, when hospitals are underpaid by the government, they tend to pass the costs along to insurers. Sound familiar? It's called cost shifting, but in this instance health plans are at the receiving end, not the patients.

Maybe it's time the health insurance industry joins the lobbying effort to have the government pay what it actually costs to provide services to patients in hospitals. Or we could just continue with this unfair, unevenly applied hidden tax. What do you think?