Bryan Caplan  

Medicare Rules: Bring 'Em On

Medicare, Food Stamps, and Rat... Worth Reading...
David Henderson argues that (thanks to the Gipper, no less), Medicare imposes price controls on health care:
But what made it a system of price controls was that the government, along with DRGs, made it illegal for hospitals to charge even a penny more than the price the government came up with.
Sounds bad.  But in my view, the next paragraph takes it all back:
[I]f a doctor takes even one Medicare patient, then he has to charge Medicare rates to all his Medicare patients even if those patients would rather ensure access by paying the whole bill (Medicare plus a doctor's additional charge) out of their own pocket. It is this system of price controls that is causing many doctors to take no Medicare patients.
So in other words, abiding by these "price controls" is a condition of receiving Medicare reimbursements - and many doctors turn down the deal.  How is this any different from public schools hiring teachers subject to the condition that they (a) don't charge their students extra fees, and (b) don't moonlight? 

Not only do I see no problem philosophically, but I actively favor such rules.  I wish there were more rules!  How about a rule that doctors can't collect any Medicare payments unless they got a perfect score on their MCATs?  Recite the entire Ring cycle from memory?  Stand on their heads for a hour every day?  Make the rules onerous enough, and Medicare effectively disappears - as it should.

Comments and Sharing

COMMENTS (5 to date)
D. F. Linton writes:

Thanks to a Clinton-era reinterpretation, you can not opt out of Medicare as a patient without also forfeiting your Social Security payments. In favor of that rule too?

Les Cargill writes:

That is one heck of a "should".

Kyle writes:

What amuses me is that anyone thought price controls would work. Okay, so you’ve reduced the price for a service. Doctors and hospitals know how much money they need, so what do they do? Increase services. A couple of decades of this nonsense and you get people running around wailing “it’s not cost, it’s utilization!” as if they were independent.

Of course there is another thing doctors & hospitals can do to deal with low medicare fees – transfer the cost to the private sector (often also with increased utilization). Back when Obamacare was just getting rolling there was a healthcare conference in D.C. A speaker from MEDPAC mentioned this problem, and pointed it’s finger squarely at who it saw as the culprit – private insurance companies. See, the problem wasn’t that Medicare was squeezing too hard, it was that private industry wasn’t matching it pound for pound.

I guess no one in the gov’t is worried about the balloon popping.

Eric Crampton writes:

Ring Cycle: in German, or translation?

Jeff writes:

[comment deleted for rudeness] -- ed. [Email the to request restoring your comment privileges--Econlib Ed.]

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