In 2002, neither Medicare nor Medicaid paid all of hospitals’ costs for treating their patients, though Medicare’s payment-to-cost ratio (97.9%) was slightly higher than Medicaid’s (96.1%). Medicaid’s performance as a payer, like Medicare’s, has improved since 1990, when Medicaid payments covered only 80% of hospital costs.  While still more profitable to hospitals than Medicaid or Medicare, private payers ratios have declined since the early 1990s.

Notes: Payment-to-cost ratios show the degree to which payments from each payer cover the costs of treating its patients. They cannot be used to compare payment levels across payers, however, because the service mix and intensity vary. Data are for community hospitals.

Source: American Hospital Association/The Lewin Group, TrendWatch Chartbook 2004: Trends Affecting Hospitals and Health Systems, May 2004, Table 4.4, p. 99, at http://www.ahapolicyforum.org/ahapolicyforum/trendwatch/chartbook2004.html.