source: Graham at 28
The study explains:
Table 4 shows payment-to-cost ratios for inpatient care by payer in California in 2005. Private insurers paid $129 for every $100 of hospital costs. Meanwhile, traditional Medicare paid only $74, and other government payers also fail to cover the cost of treatment. Although Medicare Advantage HMOs in California did not pay as well as fully private payers, they did not impose the hidden tax of either traditional Medicare or other government plans. Obviously, hospitals could not deliver the care they do if they relied fully on traditional government payers.(via reader John K.)
It appears that Medicare’s failure to pay its way poses a dilemma: We can pay for its shortfall either through the hidden tax (or cost shift) levied on private payers, or via direct taxation, by subsidizing Medicare Advantage plans.