The annual medical care spending for an average family of four is $1,788 higher than it would have been if Medicaid, Medicare, and private employers paid hospitals and doctors the same rates. But vast underpayments by Medicare and Medicaid have lead to significantly higher medical insurance costs for consumers and employers. The underpayments have created a payment gap to hospitals and physicians that privately insured employers and consumers must close through a hidden tax. The study performed by Milliman Inc., found hidden taxes:
• Adds an estimated $1,512 (or 10.6 percent) to the average premium for a family of four
• Of this amount, employers pay approximately $1,115 and the employee share is $397
• Families pay an additional $276 more in coinsurance and deductible due to the hidden medical tax
This estimated $88.8 billion mistake puts employee medical benefits at risk even more than they already were. Overall, the hidden tax represents 15 percent of the current amount spent by commercial payers on medical care. In other words, if there were no hidden tax, medical costs for privately insured patients would be 15 percent lower.
