Closing the loop

It’s convenient to think about health care costs and expenditure organized in two sectors, public and private. But one deceives oneself in thinking they’re independent. A principle problem with control of public health care spending is that public prices can’t deviate too far from private ones. If they do, Medicare beneficiaries will experience access problems, as Medicaid beneficiaries already do. That’s politically untenable, so it won’t happen.

Thus, public and private payment levels are linked with the consequence is that the extent of public cost control relies on private-sector health care prices. We can jump up and down screaming how we must get the Medicare spending growth rate down. But it will do no good if we don’t also consider how to deal with the private sector too. It’s one system, linked economically and politically, so we must be holistic.

That’s my takeaway from yesterday’s WaPo article by N.C. Aizenman, “Doctors say Medicare cuts force painful decision about elderly patients.”

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