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Right now there are a lot of people predicting that if the Medicare cuts are not fixed then health care providers will cost shift to private carriers. This means that if the 21% reduction in Medicare reimbursement is not fixed the hospitals will charge private insurance more money.
I find this hard to believe. Hospitals can try to renegotiate their PPO contracts with the private carriers. When we look at carriers that have huge market share it will be very difficult for a hospital to increase their reimbursement. If they just loss 21% of Medicare fee they will not want to loss a private contract because that private contract could be paying 31% higher than Medicare.
The long term issue with the Medicare Cuts is that most PPO plans negotiate off the Medicare reimbursement. So some PPO plans might have a contract in place with a hospital that pays 20% higher than Medicare. So we could a huge reduction on what Hospitals and Doctors can charge in both the private and Medicare markets. This might be a good thing for the country. The only way to bring down premiums is to reduce the cost of care.
