Medicare, Medicaid short physicians, hospitals nearly $90 billion annually

Share this content:
Medicare and Medicaid underpay physicians and hospitals by roughly $88.8 billion every year, which means privately insured patients are picking up the tab, according to a new study.

Employers and families bear most of the brunt of the cost sharing, according to the report, which was released Tuesday by Millman Inc. Total annual insurance costs to employers jump by as much as $16,632, while spending by families increases $1,788 as a result of Medicare and Medicaid underpayments, report authors say.

In 1999, hospitals experienced approximately an 11.3% gap in operating margin between Medicare and commercial payers, and a 16.0% gap between Medicaid and commercial payers.  By 2006, this had widened to a 32.5% gap between Medicare and commercial, and 37.8% between Medicaid and commercial, the report says.