Advancing a Free Society

ObamaCare and the Truth About ‘Cost Shifting’

Friday, March 11, 2011

By John Cogan, Glenn Hubbard, and Daniel Kessler

The centerpiece of the court battle over ObamaCare's constitutionality is the law's mandate that most U.S. residents obtain health insurance. To justify the mandate, the administration and Congress have asserted that people with private insurance pay for care for the uninsured through "cost shifting"—higher prices charged by doctors and hospitals to recover losses from uncompensated care.

The government argues that the Constitution permits Congress to require that people get insurance in order to reduce the extent of this "hidden tax." Although courts have disagreed about the constitutionality of the mandate and the new law as a whole, all courts have accepted the premise that the hidden tax is significant.

But how strong is the evidence for this proposition? Our review of the research has found that there is no credible evidence of a cost shift of any substantial consequence, either within state boundaries or across state lines. Moreover, the new law will likely generate more cost shifting—the opposite of what its supporters would have us believe.

Continue reading this Wall Street Journal op-ed…

(photo credit: Chelsea Stirlen)