 Uncompensated Care and the Collapse of Hospital Payment Regulation: An Illustration of the Tinbergen RuleJeffrey Clemens and Benedic Ippolito Public Finance Review, 2019, vol. 47, issue 6, 1002-1041 Abstract: The primary objective of “all-payer†rate setting—regulatory regimes through which states set hospital payment rates for all insurers—was to control costs through consistent, centrally regulated payments. These regimes were often linked, however, to an ancillary goal of financing care for the uninsured. We show that the surcharge mechanism used to achieve this secondary objective decreased the stability of these payment regimes. This instability reflected a feedback loop from surcharge rates to insurance coverage and back to the quantities of uncompensated care in need of financing. Instability was exacerbated when Health Maintenance Organizations were exempted from surcharge collections, creating a regulatory arbitrage opportunity. Legal challenges connected to the incidence of uncompensated care surcharges contributed to the abandonment of all-payer rate regulation by several states. These developments illustrate the wisdom of the Tinbergen Rule, which recommends that independent policy objectives be met with independent policy instruments. Keywords: rate regulation; health insurance; uncompensated care; cross subsidization (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:47:y:2019:i:6:p:1002-1041 Access Statistics for this article More articles in Public Finance Review |
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