David R. Henderson writes:
The problem: Doctors cannot legally charge more for a service than the amount that Medicare pays, and Medicare often pays a low amount. That’s a classic recipe for a shortage of doctors.
The problem starts with the Center for Medicare and Medicaid Services (CMS), the federal agency that sets prices for the medical services of Medicare patients. CMS is really a giant central-planning agency. It sets hundreds of thousands of prices. What are the odds that it sets all the right prices? Zero. In fact, with central planning, an organization like CMS cannot ever know what the right price is.
An obvious solution to this problem is to have a free market in healthcare—with no Medicare. But since that is unlikely to happen soon, incremental changes can be made to move closer to a free market. Despite the socialized system of CMS, it’s possible to approximate free-market prices with “balance billing.” In its purest form, doctors would be able to charge whatever they want for their services, and patients would pay the difference between that price and the amount Medicare pays. Today, doctors who accept Medicare reimbursement are not allowed to charge anything more.
With balance billing, many fees would certainly increase—at least for those seniors who are willing and able to pay them. But it would also stem, and even reverse, the exit of doctors from Medicare. And that’s not all. As any health economist can tell you, one of the biggest problems with our healthcare system, one that existed even before ObamaCare, is that the majority of what people spend on healthcare is “other people’s money.” One reason we know so little about prices is that few of us actually pay the price of medical care. Instead, we pay nothing, a small co-payment, or a small percent of the price. The main thing I learned in my two years as the senior economist for health care policy with President Reagan’s Council of Economic Advisers is that health care costs so darn much because we pay so darn little for it. Why hesitate to say yes to a $500 test your doctor wants to order if you know that you will pay only $50 for it?
Read more: Medicare and the Free Market | Hoover Institution.
Health care economist John C. Goodman writes:
Paul Ryan proposed a private health insurance alternative to Medicare for future retirees, liberal critics pounced. It’s another scheme to undermine health care for the elderly by “privatizing” and “voucher-izing” the program, they said.
Yet, almost one third of seniors are already in private health insurance plans. They are called Medicare Part C, or Medicare Advantage, plans. And you would be hard pressed to find any Democratic office holder who wants to abolish them. The reason? Seniors choose to be in these plans because they like them better than traditional Medicare.
Read more: Let’s Privatize Medicare – John C. Goodman.
Economist John C. Goodman nicely summarizes why seniors, and anyone who plans to qualify for Medicare, should worry about Obamacare:
As is by now well known, the legislation will lower Medicare spending over the next 10 years by $716 billion in order to fund health insurance for young people. This reduction will primarily consist of lower payments to physicians, hospitals and other providers — reductions that are so severe that they will seriously impair access to care for senior citizens.
In the last two Medicare Trustees reports, the Office of the Medicare Actuaries has predicted that these cuts will force one in seven hospitals out of the Medicare system in the next eight years. Payments to doctors under Medicare will fall below Medicaid levels in the very near future and will fall continuously behind Medicaid in the years ahead. From a financial point of view, seniors will be less desirable patients to doctors than welfare mothers. Harvard health economist Joe Newhouse envisions that seniors may have to seek care in the same places that now cater to Medicaid beneficiaries: at community health centers and in the emergency rooms of safety net hospitals.
During the election campaign, Barack Obama claimed that his administration had found $716 billion of “savings” and Democrats generally claimed that the money would come out of the pockets of doctors, hospitals and insurance companies, with no bad effects on seniors. In fact, no “savings” have been found and seniors will indeed be affected by low reimbursement rates — just as low-income patients must deal today with the fact that almost one in three doctors is not taking any new Medicaid patients.
Read about more damaging aspects of Obamacare; Did the Election Save ObamaCare? – John C. Goodman.
Colorado Public News reports:
Colorado Public News called family, general practice and internal medicine physicians across the state, using the nation’s official website that lists thousands of doctors the site claims treats patients on Medicare. Of 100 contacted, only 34 said they would readily accept a new patient. …
Dr. Jonathan Zonca, of Ascent Family Medicine in Denver, is taking new Medicare patients. But he said he hesitated after figuring out that Medicare had paid half of what other insurance plans did, over three years.
“That’s a real hard way to make money and pay our staff and pay our rent, especially in Denver — it’s pretty expensive rent,” he said.
Medicare also pays more slowly than other insurance plans, doctors say.
Read the whole article in the Boulder Daily Camera: Colorado docs often refuse or limit new Medicare patients, survey finds.
Should Medicare cover costly cancer medications that add, on average, only four months to a person’s life? This is the debate behind Provenge, a prostate cancer vaccine. Michael Cannon at Cato points out how this debate would vanish:
If the government stayed out of health care, or just subsidized Medicare enrollees with a voucher, then [some people] could purchase coverage for expensive cancer treatments. [Others] could buy lower-cost insurance and donate the savings to scholarships.
Yet politicians and government bureaucrats dictate what type of insurance Medicare enrollees get, which means they also decide what enrollees will not get. And no matter where they draw the line, someone loses. …
The only way out is Medicare vouchers. In addition to being the most plausible way to reduce Medicare spending, vouchers are the only way to protect Medicare enrollees from government rationing.
Read the whole post: Provenge Controversy Argues for Medicare Vouchers.
A minor quibble I have is that the term “government rationing” is redundant. Continue reading
This Denver Post article illustrates a key point about government-run health plans: having coverage does not mean you get medical care:
Colorado recently has added about 100,000 people to its Medicaid rolls, which is why the problem of shrinking access for Medicaid patients seems more acute.
A Denver Post article from a couple weeks ago shows that having Medicare doesn’t mean you necessarily get the care you need:
Beverly Brodnax just got dumped by her doctor.
The disabled woman is among the many Coloradans on Medicare who say it’s becoming more difficult to find a doctor who will take their government health insurance.
A 21 percent cut in Medicare reimbursements to physicians went into effect April 1, and although the U.S. Senate is poised to stave off the reduction with a last-minute, temporary stopgap this week, it’s too little, too late for some Colorado doctors and their patients.
Brodnax and her husband, David, got the disappointing news a couple of weeks ago. Beverly’s primary-care doctor of five years would no longer see her because she is on Medicare.
“He fired her,” David Brodnax said. “It’s almost impossible to find a physician who will take you as a new patient in Colorado Springs if you have Medicare.”
Keep this in mind when people propose “Medicare for all” as a means to “universal” health care.