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After balancing the budget and announcing  $2.4 trillion in government spending cuts over ten years, politicians and media pundit are insisting that it is only the beginning of the attack on health care, pensions and other social programs.

So why is balancing the budget and cutting medicare so bad for the Privately Insured? After all, the Democrats have made sure the automatic cuts leave Medicare benefits untouched, and the Republicans have blocked any new taxes.

Everyone is content right? Or so it seems. But the truth is that cutting payments to Medicare providers will mean some Americans are going to pay more. It may not be called a tax, but if you’re covered by private health insurance, money will be coming out of your pocket nonetheless.

Here’s how cuts in Medicare affects the rest: If a hospital provides a service that costs $1,000,000, and the government elects to pay just $980,000, the $20,000 gap doesn’t disappear. The hospital has to cover it somehow. It will likely do so by shifting the costs to commercial insurers, which eventually means higher premiums. This cost shifting is nothing new-it’s been happening for years-but more cuts will just make it worse.

NY Hospitals in particular have felt Federal Funding cuts for teaching hospitals over the last decade.  This has been a contributing factor to St. Vincents declaring bankruptcy last January.  Many surviving hospitals however have the size to negotiate effectively with private insurers to make up that funding short fall.

So guess who makes up that difference?  The fact remains, if you don’t deal with underlying costs, you’re not fixing the problem, you’re just covering it up.

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