June 1, 2006 3:44PM 

# Cost-Shifting in Health Care? 

By [Michael F. Cannon](https://www.cato.org/people/michael-f-cannon) 

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Today’s *New York Times* [reports](http://www.nytimes.com/2006/06/01/business/01health.html) on a new [study](https://www.premera.com/stellent/groups/public/documents/xcpproject/newsroom_5_31_2006.asp) that claims that low payments from Medicare and Medicaid lead providers to shift costs to private payers.

Sounds plausible, but economists are skeptical. Michael Morrissey [argues](http://content.healthaffairs.org/cgi/content/full/hlthaff.w3.489v1/DC1) that cost-shifting can only occur under limited circumstances (usually, when government has restricted competition among providers), and that what’s actually happening is that providers are price discriminating.

It may sound like an unimportant difference, but here’s the rub. If Morrissey is right, then increasing Medicare and Medicaid payments should *increase* the prices that providers charge private payers.

Is that what the Blues want?

##### Related Tags 

[General](https://www.cato.org/general), [Health Care](https://www.cato.org/health-care) 

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