Cost Shifting Does Not Reduce the Cost of Health Care

This commentary addresses the differences between cost shifting and cost cutting and identifies the reasons why health care in the United States is more expensive per capita than the health care of any other nation.

The author argues that while cost shifting within health care may be important for purposes of equity, it does nothing to reduce the actual cost of health care. He then goes on to identify nine areas that drive up costs within American health care relative to other industrialized countries. They are:

  1. high administrative costs;
  2. higher ratios of specialists to primary care physicians;
  3. stand-by capacity that is not fully utilized;
  4. open-ended funding;
  5. high malpractice costs;
  6. the absence of budget ceilings in health care;
  7. a lack of support for the poor, leading to increased hospitalizations;
  8. high drug prices; and
  9. high physician incomes relative to other countries.

Cost shifting will not solve the problem of high health care costs. Only substantial changes in the various ways the United States pays for care will result in lower costs.

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