Cost-shifting

Definition

Health Economics

  • A loose term used to describe any activity through which costs are shifted from one decision-maker to another. As examples, both the activity of health care insurers in increasing copayments for insured workers and hospital physicians in prescribing drugs whose cost will fall on community-based practice budgets are ways of shifting costs, in the one case from employers to workers and in the other from secondary to primary care institutions. In the USA, cost-shifting is said to occur when a hospital charges fees in excess of costs to patients with private insurance in order to compensate for losses from patients with government-sponsored insurance or who are uninsured. In these cases, as in many others, it is not necessarily genuine opportunity costs that are being shifted, but charges.
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