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.
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.
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.