Healthcare Reform, Take 2

As should surprise no one, having failed to deal with the most pressing challenge in reforming our healthcare system in the first round of healthcare reform last year, the second round has begun. Wisconsin Republican Congressman Paul Ryan has fired the opening salvo with a proposal of his own for controlling Medicare costs:

Starting in 2022, new Medicare beneficiaries will be enrolled in the same kind of health-care program that members of Congress enjoy. Future Medicare recipients will be able to choose a plan that works best for them from a list of guaranteed coverage options. This is not a voucher program but rather a premium-support model. A Medicare premium-support payment would be paid, by Medicare, to the plan chosen by the beneficiary, subsidizing its cost.

In addition, Medicare will provide increased assistance for lower- income beneficiaries and those with greater health risks. Reform that empowers individuals—with more help for the poor and the sick—will guarantee that Medicare can fulfill the promise of health security for America’s seniors.

Here’s how David Brooks characterizes the plan, which is only one component of a much more sweeping proposal for spending reduction in Washington:

The Ryan budget doesn’t touch Medicare for anybody over 55, but for younger people it turns it into a defined contribution plan. Instead of assuming open-ended future costs, the government will give you a sum of money (starting at an amount equal to what the government now spends) and a regulated menu of insurance options from which to choose.

Equally unsurprisingly the plan is being called “radical”.

The rising costs of Medicare and Medicaid are not merely a Republican bugbear. Last week the CBO (again, unsurprisingly) announced the last round of healthcare reform will cost more than the original estimates.

Tyler Cowen presents some reasons why Cong. Ryan’s approach to cost control may not be effective:

  1. Individuals have serious misconceptions about the science, or the badness of a particular condition, even in light of government or other third-party advice. Or perhaps individuals simply do not understand the nature of all of the choices at hand.
  2. Perhaps an individual will choose “no coverage for lung cancer,” but the government cannot precommit to the outcome of no coverage. Of course as cost control becomes more pressing, we’ll have to learn precommitment for at least some issues, one way or the other, so this cannot be a decisive objection. The entire premise behind the discussion is that we cannot cover all treatments through government subsidy.
  3. Over time, perhaps a government Board can rebalance the mix of coverage better than an individual can. People age, possibly lose some mental faculties, science advances, costs change, and so on.
  4. Those are good arguments. They are good arguments for a mixed system. They are not good arguments for ruling out all individual choice of benefits. They are not good arguments for ruling out a scenario like that outlined in the first paragraph of this blog post.

To determine whether the Ryan plan can succeed we might want to start by defining success. I would define success as an approach that reduces healthcare costs while preserving reasonable standards of public health. I see little reason to believe that the plan will succeed by that definition. However, if your definition is “reduce the future healthcare liabilities of the federal government” if fully implemented it might well succeed.

In bullet point form here’s why I don’t think the Ryan plan will succeed by my definition of success:

  • For a market-based plan to succeed (presumably the reason for its emphasis on individual choice), there must be a market. There is no market in healthcare.
  • The plan deals only with the demand side of the equation and patients aren’t the only ones responsible for creating demand in healthcare. Providers create their own demand.
  • There’s a supply problem as well as a demand problem.
  • There are both frequency (number of procedures performed) and amplitude (cost per procedure) problems in healthcare. Healthcare costs are the sum of the individual cost per procedure over the total number of procedures performed. To control costs we must constrain both.
  • The Ryan plan does nothing to constrain costs other than limiting how much the federal government will pay.
  • Continuing to cover those over 55 under the present system means that the cost problems of the present system will be with us for thirty years or more.
  • That deadline is likely to cause the present system to be potentialized, i.e. costs for Medicare may rise faster as a consequence of the Ryan plan than they otherwise would.
  • We can’t wait 30 years for costs to be brought under control. Healthcare is already 17% of the economy (with the federal government paying about $1 trillion of that). It is on track to comprise more than 20% of the economy within a few years.
  • The list goes on.
46 comments… add one
  • michael reynolds

    30 years from now the baby boomers will all be dead. That in itself should solve the problem of the year 2041.

    But this is politically clever in that it allows the boomers to keep running up bills while ensuring that the kids paying those bills have not only less health care when their time comes, but crushing levels of taxation.

  • Maxwell James

    Yep. While I’m pleased to see any politician take a whack at non-discretionary spending, Rep. Ryan’s proposal seems predictably politicized. Just cut benefits for people who will be old 10-20 years from now (and beyond), but leave them in place for people who are old already.

    Perhaps this is the first step towards a better proposal. But I doubt it.

  • Dave, unfortunately I cannot recall where you stand on how to reform how we perform health care in the US. I do know you have pointed out repeatedly, and in my view correctly, that our current Medicare and Medicaid systems are putting us onto the path of fiscal disaster.

    My thoughts are this: I lived in France for two years, and remarkably, even though I was an expatriate and NOT a French citizen, I was covered under their universal health care system.

    Do they pay a lot? Yes, I saw a graph recently they pay the second highest percentage of GDP on health care in the world (the US was first, by a LOT). However, even though they are having issues related to retirement age and fiscal disasters looming, they seem to have the health care part of life under control.

    Since we have socialized the risk and privatized the profits on Wall Street, I don’t see how we can reasonably say we’re the paragon of capitalism that many like to say we are, so would trying a “socialist” solution of single-payer be more reasonable than forcing a “market” solution onto something that inherently is NOT a market in any reasonable definition of the word?

  • 30 years from now the baby boomers will all be dead.

    Actually, no. As a rule of thumb Baby Boomers are those born between 1946 and 1963. In 2003 the life expectancy for those then 65 years of age (the oldest Baby Boomers) was about 84 years. Or, in other words, in 30 years fewer than a quarter of the Baby Boomers will have died, the remainder will be around for years more, and, if present trends continue, they’ll be racking up the biggest medical bills in history.

  • I’ve posted my views a couple of times, Jack. Here’s the Reader’s Digest version. In a perfect world a market system would be best. We’re not in a perfect world. We can’t get to a perfect world from where we are right now. Trying to get to one will make things intolerably bad.

    Under the circumstances we need to do at least two things neither of which I think are likely: we need to dump the fee for services model and we need to go to some sort of system in which everybody is in the same system, whether single payer or some other approach.

  • Thanks for the Reader’s Digest version. I knew you had posted your views, I just wasn’t (and still am not) in a position to seek them out at the moment.

    I just wish we would look at how it is done elsewhere. When I lived in France it was amazing how much less stress people felt over health care because it was taken care of. I suspect one of the key stressors here is from worry. One of my earliest work experiences, back in the 1970s, was when the assistant manager of the place I worked wouldn’t go to the doctor to get his back pain diagnosed because he didn’t have health insurance through our mutual employer.

  • Dave,

    I think a lot depends on the details in how this would actually be implemented. A voucher system, by itself, would not be enough. With payments capped, the question is who will become the “sucker” that will take the financial hit in this plan. Will it be the consumer who will get less health care, or will it be providers who will be forced to rein in costs and lower their incomes? Hard to know, but someone is going to be the “sucker” in any cost-containment scheme. It seems to assume (or hope) that setting a payment cap along with regulation on minimum coverage for that payment will force the rest of the system to align to that reality. Possible, but unlikely IMO.

    Michael,

    Yep. Next on the list will be Social Security.

  • Jack,

    France does have a nice system, but we’re not France. For one thing, do you know what French health care workers are paid?

    Dave,

    Well, we could just put everyone under Medicare and then we could change Medicare’s payment scheme. Easy, right? 🙂

  • steve

    Ryan’s plan relies on private insurance purchased through exchanges. private insurance has not held down costs any better, maybe worse, than Medicare. Why would private insurance hold down costs for those over 65 but not those under? What do we do when seniors face the same problem we already face with private insurance, ie, fewer people become able to afford it?

    I already posted on Cowen’s piece. I see two ( at least) problems. First, the private insurance market does not work the way he describes it. The private market would need to drastically change to provide that kind of product. Next, I see insurance companies shuffling around the costs of various kinds of superior care vs lesser care so that they remain budget neutral, at best. You might feel better about your coverage, but it seems unlikely to change much.

    Steve

  • steve,

    If I understand the plan correctly, the private insurers would be forced by regulation to cover most things for the price set by the price cap. It would, therefore, basically force private insurers to hold down costs by whatever means necessary in order to stay in business.

    Also, here’s Megan McArdle’s analysis.

  • steve

    Yup, read McArdle yesterday. I missed the part about a price cap. Are you sure? That is very anti-market, so it would surprise me, sort of. That complicates things quite a bit. Guess we need to see the actual plan.

    Steve

  • steve,

    Price cap may not be the right term. What I mean is that people would get a fixed amount from the government to spend on health insurance. Secondly, the government would require a certain level of coverage be made available for that fixed price. At least, that seems to be the design from what I’ve read so far.

  • Andy, the apartment I lived in when I was an expatriate in France had formerly been the residence of a doctor.

    I feel that physicians in the US are overpaid, in part justified by the malpractice insurance they have to carry, so any reform would have to address that AND the cost of education in the medical field as well.

    Should doctors be paid more than the engineers who design our bridges? They are in the US.

    We need to look at the entire system, but then, I also don’t think the banksters should get the pay they receive, either.

  • PD Shaw

    Jack, IIRC French physicians are compensated the least among comparable OECD countries, it’s something like 60% of U.S. Also, I believe Dave has comparisons on this website that show healthcare costs are increasing in all comparable OECD countries at unsubstainable rates. I take from this that it’s not clear that switching to another country’s healthcare system would even help.

  • steve

    I think that physician salaries are in a bubble and need to decrease, but the spending that we docs create is even more problematic. A large part of our costs is driven by new technology. That is part of what makes medical care potentially unsustainable everywhere. Other OECD countries have an advantage in that they start at a much lower baseline.

    @Andy- My understanding is that the voucher value will be fixed. Seniors can then use that money to buy whatever plan they want. They may need to pay additional money out of pocket to get a plan.

    Steve

  • michael reynolds

    Or, in other words, in 30 years fewer than a quarter of the Baby Boomers will have died…

    Damn. I am not prepared to live another 30 years. And frankly if I do then a lot of lifestyle and health journalists will have a lot to answer for.

  • in part justified by the malpractice insurance they have to carry, so any reform would have to address that AND the cost of education in the medical field as well.

    I second this. When you mentioned malpractice, I was about to go on a tangent until I read the next sentence. The cost of education, and the deferred income while getting it, is a huge issue. Being a physician is front-loaded with costs and only eventual benefits (albeit great benefits).

    My wife was 30, $100,000 in debt (would be more, but she had a full scholarship for undergrad and attended a state medical school), and had spent the previous five years of her life earning $10/hr. Now that she’s earning good money, we really don’t feel at all like we’re cheating the system because the system has already extracted huge costs in terms of finance, psychological toll, and family.

    I would have preferred it if she had become an engineer.

    But if you mitigate those costs as part of a package, along with reducing the voluminous paperwork that keeps my wife working 60 hours a week (35 of which spent actually seeing patience), I think that we would have been on board.

  • I think that physician salaries are in a bubble and need to decrease, but the spending that we docs create is even more problematic.

    I second this as well. It doesn’t take many mercenary doctors racking up thousands of dollars in tests so that they can see a few hundred (the rest going to others and equipment) to really skew things. Cut down the payment for any given procedure, they’ll often just buy new equipment or make new deals costing more money so that they can make the same amount.

    And it’s not just mercenary docs. Since it’s not a doctor’s job to contain costs, why not just be triple-sure? When you’re a hammer, the nail is a solution to everything. I know that hundreds of dollars were spent on my behalf for insanely regular glaucoma testing a few years ago. I had no incentive not to. The doctors, who I don’t *think* were running a scam, had the time and equipment so why not just – just to make sure that the pressure index hasn’t increased in the last two months?

  • I’m sure there are “mercenary doctors” out there who set up diagnostic companies they send business to purely fro profit, but I don’t think they are any more numerous than the banksters who did far more damage to our economy.

    I think most physicians are trying to do their best in a scientific field that is far more inexact than many of us realize or want to even think. Even in engineering we have huge disputes over data, so in an incredibly complex system like a human being, how can we really know what is going on in areas that lack definitive tests?

    Perhaps step one is to align our expectations with reality instead of demanding every test known to man. I doubt that will ever happen, unfortunately.

  • Other OECD countries have an advantage in that they start at a much lower baseline

    That, I think, is the sticking point. We’ve got to lower the baseline.

    Also, it’s heartless to say it but the cost of entry is irrelevant to incomes. It’s only relevant to whether it’s a good investment.

  • Maxwell James

    Having looked at it more carefully now, what I find intriguing about Rep. Ryan’s proposal is how much it mirrors Obamacare. While there are some fundamental differences (i.e., Medicare Advantage vs. Medicare Advisory Board approaches), both really do lean on exchange-based systems subsidized with federal bucks. So I can’t help but think that whatever way the wind blows, this is the shape of things to come.

    What I find irksome about Ryan’s proposal is the top-line tax cut. Given how many of the top 5% are in federally-subsidized industries like healthcare and banking, I can’t help but read his proposal as cutting their personal taxes while maintaining their reliance on tax dollars. It’s a perpetual motion machine for redistributing income upwards.

  • Maxwell,

    I wonder if there are other tax changes (I have not read anything about that part of the plan). Marginal rates are only part of the tax story. For example, I’m supposedly in the 25% tax bracket, but my effective tax rate last year was under 4% (10% if you include payroll taxes) thanks to deductions and credits. Marginal rates are a factor, but only one factor in determining what people actually pay.

  • Given how many of the top 5% are in federally-subsidized industries like healthcare and banking, I can’t help but read his proposal as cutting their personal taxes while maintaining their reliance on tax dollars. It’s a perpetual motion machine for redistributing income upwards.

    Much my view as well. I think the dominant economic story of the last 25 years has been that rent-seekers have prospered, others have not.

  • Maxwell James

    Andy, I’d be willing to contemplate even lower top rates if the right loopholes & deductions were closed; that was the approach taken in the Bowles-Simpson plan. But I skimmed the “Path to Prosperity” this morning and my initial reading is that for a 70+ page document it is maddeningly unspecific, especially on the issue of tax reform, while also making absurd claims for its efficacy (4% unemployment by 2015 – really? On which planet?).

    The section on tax reform is five pages, pp. 50-54, yet manages to say nothing about which loopholes or deductions would be eliminated. Suffice to say there’s nothing about the home mortgage interest tax deduction, the employer healthcare deduction, or any specific corporate loopholes that would be closed. Given that, I am extremely skeptical it would even meet its stated goal of maintaining the historical revenue benchmark of 18-19 percent.

  • PD Shaw

    I hope nobody thinks I begrude docs their salaries; I’d hate to see what happened if we ever decided to reduce their wages by fiat. I think we need to look at reductions in salaries that correspond with improved nonpecuniary quality of life values.

  • PD Shaw

    Does anybody know if this CBO report on Ryan’s plan, dated January of 2010, is substantially the same as what is being heralded today?

    http://www.cbo.gov/ftpdocs/108xx/doc10851/01-27-Ryan-Roadmap-Letter.pdf

    This morning Ryan was on t.v. claiming a CBO report of substantial growth if his plan is enacted (I believe primarily from debt elimination and the reduction in dead weight loss by eliminating loopholes)

  • Maxwell James

    PD – it looks similar, although that proposal clearly includes replacing the employer healthcare payroll deduction with an individual deduction. I don’t think the new proposal keeps that.

    On the other hand, this on p. 44 of the “Path to Prosperity” is pretty funny:

    Fix the Medicare physician payment formula for the next ten years so that Medicare beneficiaries continue to have access to health care.

  • Also, it’s heartless to say it but the cost of entry is irrelevant to incomes. It’s only relevant to whether it’s a good investment.

    It becomes a much worse investment if you go to school for 8 years, spend 3-5 years working obscene hours at moderate wages, and end up making the same amount that an engineer or pharmacist makes. It’s the high wages that make the cost of entry worth it. Change one too much without looking at the other and you change the equation in a pretty negative way.

  • I think most physicians are trying to do their best in a scientific field that is far more inexact than many of us realize or want to even think.

    I agree, but it doesn’t take many mercenary docs to rack up a lot of bills. But yeah, the bigger problem is more likely to be well-intentioned docs for whom expensive tests and treatments are more likely the hammer for which a whole lot of other things are nails.

  • Trumwill,

    Yes, it’s expensive and a PITA to get a medical degree. OTOH you get a lifetime of wages that are in the top decile of income. There are a lot of people with PhD’s with a lot of student loan debt who will never earn half of what most doctors do. Also, the median and average wages for doctors is way above almost all engineers. Sorry, but I don’t have a lot of sympathy for doctors complaining about student loans.

    Maxwell,

    I haven’t researched it much, but Ryan claims the tax rate reductions come with scaling back or eliminating most deductions. I don’t know the details, but those details matter a great deal in determining effective tax rates.

  • Andy, being a doctor is a good gig. Due, in large part, to salary that comes once you get out of training. My point is that if you seriously diminish the salary, as a lot of people want to do, without changing the costs of entry, you’ve significantly altered the degree to which becoming a doctor is a “good investment” especially in light of the personal sacrifices (low job satisfaction rates and lost twenties) to name a couple.

    I compared engineers and doctors because Jack suggested above that doctors shouldn’t be paid more than engineers.

  • Drew

    “Damn. I am not prepared to live another 30 years.”

    So. Are you volunteering to help solve the problem with, uh, “extreme measures?”

  • Drew

    I see we have a lot of would be Kings here who want to rule the world…………hubris if I’ve ever seen it. I wonder how many of those vote for candidates proposing larger government – the root cause of rent seeking through regulatory capture. But I digress.

    I’m tired, having just gotten back from a trip to New York. So just a quick hit:

    Dave – There is no market in healthcare.

    Providers create their own demand.

    These observations are both true, but self fulfilling prophecies. I can’t tell you how many times I’ve heard managers tell Boards that “it can’t be done.” Bull. Its painful, so they don’t want it to be done. We can transition to a market based system. So far, its simply been convenient to not do so.

    And as for providers creating their own demand. Only because there is no throttle in a third party payer system. This reminds me of the JK Galbraith argument that advertising creates false demand and should be abolished. BS. When consumers bear the price, advertising will not induce unwarranted purchases. And if consumers were subjected to the price of health care services we wouldn’t have providers with carte blanche. Are we to believe that Porsche advertising or salesmenship induces people to buy Porches when they can only afford a Honda?

  • michael reynolds

    Drew:

    Currently attempting suicide by Glen Ord 25. If that doesn’t work I may try something peatier.

  • steve

    Drew- You can test drive your Porsche. You can take it back if you want. You can trade it or sell it. Cant do that with your bypass surgery.

    “And if consumers were subjected to the price of health care services we wouldn’t have providers with carte blanche.”

    Figure out how to do it w/o insurance. How does that 23 y/o couple pay for a premie? The 30 y/o pay for major trauma? The $35,000 a year guy pay for his $70,000 chemo?

    Steve

  • michael reynolds

    Details involving actual humans in the real world. Drew not interested.

  • I don’t think we should (or even could) reduce physician pay by fiat. My comparison between doctors and engineers and their pay was to give an example of two situations where lives depend on the worker doing their respective jobs well. If we reward based upon that (neither health care nor bridge building can ever realistically be market-based in the way that those who say the market-based solution is always best) then it seems to me things are out of whack.

  • Drew

    steve –

    One of us is off his rocker, and not being clear.

    “You can test drive your Porsche. You can take it back if you want. You can trade it or sell it. Cant do that with your bypass surgery.”

    I don’t know what this is intended to mean, or what relevance it has to the debate.

    “And if consumers were subjected to the price of health care services we wouldn’t have providers with carte blanche.”

    “Figure out how to do it w/o insurance. How does that 23 y/o couple pay for a premie? The 30 y/o pay for major trauma? The $35,000 a year guy pay for his $70,000 chemo?”

    You completely miss – I fear intentionally – my point. Insurance is exactly what is required to cover the three events you cite. No one would disagree with that. Any more than they would disagree with the notion that insurance is required if your house burns down. In fact, all catastrophic events should be covered. And catastrophic insurance can be priced just as home, auto or life – and with deductibles priced in.

    But insurance should not be designed to cover routine care or a trip to the doctor for the sniffles. And as a practicing physician you know that a tremendous amount of insurance covered care is just that – routine, “take two aspirin and call me in the morning stuff.” And the patient is not exposed to the price of that………..so off to the doctor they go at a whim. No one eats hamburger on an expense account.

    Further. Having had a grandfather and father who were doctors, I’ve watched how the norms of care have evolved over the years. Fall and bump your head? Years ago it was observation for twenty four hours, and if you got dizzy or started vomiting go to the ER; maybe a real problem. Now?? Image, image, image. Why? Patient doesn’t care. Its “free.” And in the extremely rare case of a real problem the lawyers will sue your face off if you didn’t do it. And who knows, maybe the docs get a cut of every CAT or MRI. (I remember you making a comment awhile back that almost made me fall out of my chair: (paraphrased) “we don’t care about Obamacare and restrictions, we’ll just find ways to bill to make up the difference.” Your words. I was shocked and appalled.)

    There is a bottom line. Ever since FDR made the catastrophic decision to limit wages and employers made up the market gap with tax advantaged bennies we have had a structurally unsound system that is now coming home to roost in a magnitude that has dire implications for the nation’s finances. It was predictable; as it was an attempt to violate laws of economics just as if we had tried to pretend the law of gravity did not exist. You all can stay in this state of denial and attempt to develop exotic, Rube Goldberg solutions if you wish, but it will be just about as effective as trying to design a perpetual motion machine.

  • steve

    ” And as a practicing physician you know that a tremendous amount of insurance covered care is just that – routine”

    It is not the routine care you appear to be thinking of that really drives costs. It is procedures, drugs and the more expensive testing, think imaging, that are really driving costs. Routine visits to the doctor are one area that might be amenable to a more market oriented approach, and I have no problem with trying them. But, we are talking small potatoes. The big bucks are elsewhere.

    Steve

  • I don’t think we should (or even could) reduce physician pay by fiat.

    Either you mean something different than I do by “reduce”, “pay”, or “fiat”, I don’t understand your remark, or the remark is incoherent. Let’s unpack it and look at it. Can or should we reduce what we’re paying out in Medicare? We must. There simply is not enough money at any foreseeable level of taxation to cover the expenses at the present rate of increase. Capping, reducing reimbursement rates, and so on are all methods of “reducing physician pay” and I don’t see a difference in principle between capping Medicare expenses (as in the Ryan plan) or cutting Medicare reimbursement rates (as the Congress has been obligated to do but dodged for a decade) and reducing physician pay “by fiat”.

    And any law is a fiat. If we can pay physicians by fiat can’t we cut what we’re paying to physicians the same way?

  • It is procedures, drugs and the more expensive testing, think imaging, that are really driving costs

    We’ve covered this a couple of times before. The facts don’t support this claim. Japan uses imaging to a significantly greater extent than we do; their healthcare expenses aren’t rising the way ours are. Drugs cannot possibly be causing the increases in costs. It is not mathematically possible. Drugs account for about 10% of total expenses. You can’t get a 10% increase in total expenses from something that is that small a proportion of total expenses.

    The financial statements of hospitals and individual practices and individual patients do not support the claim that the materials used in tests account for a substantial proportion of costs or the increases in costs. Capital expenses and consumables have been going down as a proportion of costs not up.

    Unless by all of these things you mean wages in which case I agree. Wages throughout the healthcare sector are driving costs up. Not just physicians but not excluding them, either. Technicians, staff, administrators, managers, etc. Too many people making too much money, as the head of the Mayo Clinic put it not long ago.

  • Dave, out of curiosity, do you have any good statistics on the changes in wages of different kinds of employees (nurses, technicians, IT, etc) within medicine? The only thing I have is for physicians themselves, but I don’t have any comparable information on staff.

    Also, do you have the McKinsey report? If not, send me an email and I’ll be glad to send it to you. It’s long, but full of interesting stuff.

  • Also, do you have the McKinsey report?

    If you mean “Accounting for Healthcare”, yes, I’ve read it. The short form is: it’s wages. They say, more broadly, “higher cost of inputs” but when you dissect the costs into components wages as I’ve defined it to include professional services, staff, administration, management, etc. comprises by far the greatest source of the difference in costs between the U. S. and other OECD countries.

    As to wage differentials I know the report above singles out physicians and nurses as having substantial higher wages than baseline but they don’t go much farther than that. I don’t have any statistics at hand but I do have a good memory, I have first hand knowledge of what people working various different jobs in healthcare and out were making 40 years ago and I have a pretty fair notion, also first hand, of what they’re making now. In connection with my actual gainful employment I have looked through a lot of companies’ books.

  • While true (about “higher cost of inputs”), the full report (as opposed the synthesis) paints a much more complicated picture and specifically describes simply lowering reimbursement levels as a problematic mechanism to reduce costs.

  • To my mind the big question is not whether we can fix what’s wrong with our healthcare system by simply lowering reimbursement levels (which I’ve never argued) but whether we can fix what’s wrong with our healthcare system without lowering reimbursement levels. I don’t think we can.

  • I guess my main issue when I hear “lower reimbursements” is that I think of what congress has been punting on for the last many years, which is lowering reimbursements (on an equal basis, as I understand) across the board and mainly cost-containing that way. For that to work, it has to assume that providers take the hit and allocate it in a beneficent way rather than going the McAllen route and/or absorbing as little of the cost as possible through revenue and profit maximization and/or, in the case of hospitals, simply closing down.

    If you’re talking about selective reimbursement lowering (as always, the devil is in the details on that one), and not just that, we might actually be on the same page. Lowering system costs, and not just through service reductions, is definitely something we need to figure out how to do. So we need to either alter how we pay for health care, or how much we pay through the current model.

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