Critical Condition

The Old Cost-Shift Myth Persists

In the media coverage of the health-care debate, I’m still seeing frequent references to the old canard that the existence of tens of millions of uninsured Americans explains a big part of the problem of costs, because they run up medical bills they can’t or won’t pay, resulting in a cost-shift to insured patients. The math has never worked for this argument — uncompensated care provided by hospitals and other providers makes up less than 3 percent of annual health spending, and is largely offset by government subsidy of the institutions — but that hasn’t stopped many from repeating it.

Advocates of a larger government role in health finance find it expedient to claim, improbably, that increasing subsidy and insuring more people will reduce costs. This isn’t so much a free-lunch claim as it is a you’ll-be-paid-to-eat-filet-mignon claim. At the same time, medical providers find it expedient to claim, also improbably, that cost inflation is mostly about services they don’t sell, or don’t sell to paying customers, rather than about services they sell too often at inflated prices to third-party payers.

Expediency is not the same thing as accuracy.