Private payers compensate for Medicare, Medicaid losses

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Underpayments from Medicare and Medicaid are forcing U.S. employers and consumers to pay billions for medical care each year, a new insurance company study finds.

Hospitals in Washington state charged an additional $738 million to private payers to make up for shortfalls from Medicare and Medicaid in 2004, according to Seattle-based Premera Blue Cross. The same year, Washington physicians charged private payers an extra $620 million to compensate for losses from the government programs.

Another finding: In 1997, Washington hospitals had an annual profit margin of 2.9% for services for Medicare beneficiaries. In 2004, they experienced a loss of 15.4% for those services.