The Wall Street Journal editors make the same point I’ve been making from time to time:
The other goal of a new public plan is to force doctors and hospitals to accept below-cost fees. This is how Medicare tries to control costs today, but it’s like squeezing a balloon: Lower reimbursements mean that providers — especially hospitals — must recoup their costs elsewhere, either by shifting costs onto private payers or with more billable tests and procedures. The only way costs can conceivably be managed via price controls is if government is running the whole show, which naturally leads to severe restrictions on care while medical innovation withers.
As I’ve said before that’s a strategy all but certain to reduce the supply of healthcare. I believe that’s a mistake.
Is it, or is that what other countries do? How does one measure the quantity of health care we get and assuming there are such metrics have there been cross country comparisons?
Our so-called “innovation” hasn’t given us a great return, as can be determined by comparing US health characteristics with those of other countries, and has been VERY expensive. US taxpayers have subsidized this innovation and then has had to go thru a dysfunctional market to get access to those innovations and, so, US citizens end up paying twice for the innovations.
We must stop subsidizing the innovation and let free market forces determine what new products are brought to the market. If US health care industry oligarchs determine that the risk of getting a return on innovation is too high without taxpayer subsidies and therefore they reduce new product innovation, then so be it. Let innovation move into activities that commoditize (i.e., cost reduction) existing products and increase the distribution of existing products so that US families can once again afford the best health care available.
Regarding the issue of accepting below cost fees. If you consider the health care industry as a whole, I don’t think you can say they have been forced to accept below-cost fees. If you say that one link in the health chain is loosing money, then one way of getting those costs covered is to transfer profits from other links in the chain. Think of it this way… a company could spin off all of its departments into separate companies (e.g., an engineering company, a marketing company, a production company, etc.,…) and then have all but one company show losses and all the profits get transferred to one company. These companies can then tell the workers in the loss companies that they must agree to wage concessions. This is not a new trick. It is used throughout the US and the health care industry is no exception. There are plenty of profits in the health care industry that can be transferred to areas of the industry that are showing losses.
Also, in my opinion, hospitals should no longer be given non-profit status. They just don’t provide the same benefit to our families that they used to.