Formally, cost-shifting is the notion that, when a hospital experiences cuts in public sector reimbursement (e.g., a reduction in the Medicare reimbursement rate for a particular procedure), it responds by raising prices to patients who pay with private insurance. Hospital administrators and policy people argue that this practice is rampant, yet evidence is thin and many economists argue that it makes no sense.

Cost shifts have been a fact of hospital Economists usually presume that a financial survival for decades ... the profit-maximizing firm has previously data show ... how private payment is fully exploited all opportunities to a mirror image of public payment over reduce costs or raise revenues, so time and that the cost shift occurs. absent a fundamental rethinking of Hospitals must make up for shortfalls the firm's strategy, it would have to through a combination of approaches absorb the loss." and cost-shifting is among them." DAVID DRANOVE, ET AL. 2017 RICH UMBDENSTOCK, FORMER PRESIDENT AND CEO OF AMERICAN HOSPITAL ASSOCIATION