CFCE Blog

New America responds to CFCE study

By Loren Kaye
Posted 6/12/2007

The New America Foundation has issued an odd response to a CFCE study that found, among other things, that the "hidden tax" attributed by New America to the cost shift from uncompensated care for the uninsured - tagged by John Edwards advisor and New America author Peter Harbage at 10% of premiums - to in fact add only 1.4 percentage points to the private payer mark-ups by California hospitals.

A press release issued by Harbage, but not published on the New America website, made the odd claim that the CFCE study "offered further confirmation that the hidden tax in health care exists today."  New America deployed that same straw man against the Hoover Institution report that criticized the New America methodology. In fact, no serious researcher or policy wonk disputes that there is a cost shift to private payers from uncompensated care; the debate is over the magnitude and importance of the cost shift. They are declaring victory over in a battle that's never been waged.

In analysis typical of New America rigor, Harbage concludes that the residual markup that hospitals apply to private payers - about 60 percent of the total markup after subtracting that amount attributable to all cost shifts - is that "cost shifting to cover the uninsured is the most likely explanation for the majority of the 'unexplained" 60 percent."  Dispensing of the need to address either Prof. Kessler's analytical methods or offer independent data or evidence, the mere availability of an explanation is proof enough for Harbage.

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