By Sean Nicholson
This examine stories the rationales, legislative heritage, and monetary incentives of either forms of medical institution subsidies.
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Additional resources for Medicare Hospital Subsidies: Money in Search of a Purpose
At teaching hospitals in the 46 states that were eligible for IME payments, residents were subsidized and became less expensive, and beds were taxed and became more expensive. 13 In table 8, hospitals are ranked according to magnitude of the marginal IME payments, and payment amounts for the fifth percentile, median, and ninety-fifth percentile hospitals are reported. 8 percentage points. The range between the fifth and ninetyfifth percentile hospitals indicates that there was considerable variation in the magnitude of the marginal payments between teaching hospitals.
The premise of Medicare’s Prospective Payment System is that hospital payments should only be adjusted for legitimate sources of cost variation between hospitals. Such a system encourages hospitals to provide services efficiently. The Medicare DSH program is now an exception to this rule. Hospitals with a large volume of low-income patients receive higher Medicare prices even though there is no evidence of a positive correlation between the volume of low-income patients and the cost of treating Medicare patients.
The coefficient estimate on the change in the Medicaid price is positive, as expected. A $1,000 increase in the effective price of a Medicaid admission (or a $1,000 reduction in the price of an uninsured admission) is associated with an increase of 60 Medicaid admissions. 35 for private nonprofit hospitals. As expected, sole community hospitals that are isolated geographically are less responsive to price changes than hospitals that operate in more populous markets. The coefficient on the change in the number of Medicaid beneficiaries is positive as expected.
Medicare Hospital Subsidies: Money in Search of a Purpose by Sean Nicholson