• More reasons for despair

    Lots of wonks are linking to Ezra Klein today to discuss this:

    One of the dirty little secrets of the health-care system is that Medicare has done a much better job controlling costs (pdf) than private health insurers.

    medicarephigrowth (1)1.jpg

    The problem is that Medicare can’t control costs too much better than private insurers or, as you see from the article above, doctors will simply abandon Medicare. In a world where there’s only Medicare and Medicare decides to control costs, doctors can either take the pay cut or stop being doctors. And as we see from other countries, lots of people want to be doctors, even if being a doctor doesn’t make you particularly wealthy. But in a world where Medicare is just one of many payers and Medicare decides to control costs, doctors can simply stop taking Medicare patients and a lot of legislators will lose their jobs.

    It gets worse.  When Medicare does a good job at controlling costs, then doctors scream and threaten to leave.  One party declares that Medicare is rationing and will hurt seniors.  The other party buckles and pays more.  Then, the federal budget looks bad.  One party screams about the fact that Medicare can’t contain costs and that we should let the private insurance companies (which don’t contain costs as well) contain the costs.  It all fails.

    Rinse.  Repeat.

    The part that makes me despair is the complete disconnect between what groups say they want, and their displeasure when they get it.  People seem to be upset that Medicare costs so much; but any attempt – even successful ones – to slow those cost increases is met with howls of rage and screams of rationing.  People don’t seem to realize that the money we spend in Medicare isn’t going into a pile somewhere.  It goes to doctors and nurses and hospitals and companies.  When you spend less, those people make less.  All of them.

    You simply can’t have it both ways.  You either choose to spend less and piss people off or spend more and piss different people off.  Either way, you’re going to piss someone off.  A good system would try to make that decision rationally.  But at least it would make a decision.

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    • Dr. Carroll,

      I am confused by some of your statements. Just because Medicare “controls costs better” does not mean that it is in reality controlling costs. CMS just delegates what it wants to pay for various services. It is a game of lobbying power and subjective ends. As well, you know that Medicare does not fully cover most procedures. So if you mean underpaying as a way of controlling costs, I guess you would be right, but I do not think this is rational decision.

    • While I agree that Medicare’s ability to control costs is linked to the private sector, it’s also important to remember that abandoning Medicare is easier said than done. Medicare represents a significant and growing part of the market, and providers of all types turn their back on it with caution. In fact, if you look at the Medpac data on physician payment adequacy, there is very little evidence that physicians are abandoning Medicare in droves and hindering access to beneficiaries, despite the decade of slowed costs.

      And before concluding that Medicare underpays, a close examination of what the real costs of providing services needs to be done. We have vast evidence on payment and service use variation in Medicare. If there are other hospitals and doctors across the country who have made the changes to provide quality care at lower cost at current payment rates, we shouldn’t assume the claims by others that they are being underpaid are correct. Instead, they should be able to demonstrate in a transparent way to payers and patients that the sources of their excess costs. If they can do so, then higher payments may be appropriate. If not, then they must begin doing the hard work to reduce them as others have.

    • The problem is that we have a considerable number of people who don’t believe in having a “system” at all, and who label any potential decision made by such a “system” as a form of communism/socialism/facism/vialoation of the constitution/intrusive behavior.

      They don’t want a system. They want the market to ration healthcare. Meaning you get what you pay for. Isn’t that clear?