Will Government Price Controls Fix Health Care?

Medicare Extra is a Reference Based Pricing program that mandates government price controls.

By Bill Rusteberg

The left is renewing their call for Medicare for all Americans in anticipation of this year’s midterm elections. In a new twist it’s proposed employers be allowed to maintain their own health plan but will be mandated to utilize Medicare pricing as the basis of claim payment for all medical providers. This is government price controls, the antithesis of a free market.

Government price controls at the proposed levels will produce significant savings over traditional PPO plans whose reimbursement rates are as high as 250-400% of Medicare. Reference Based Pricing plans in the market today reimburse on average 150% of Medicare allowable. Government mandated cost controls under the Medicare Extra plan will produce savings off both strategies, reducing  costs by 50% and more.

Medical caregivers, particularly hospitals, will necessarily have to learn to become more efficient to survive.

Managed care organizations in collaboration with their provider partners have brought this on themselves. With egregious pricing fueled by secretive managed care contracts that guarantee price increases year after year, heretofore powerless consumers have had enough. With their financial backs to the wall, they simply cannot afford health insurance anymore and look to government for answers instead of the free market.

What free market?

Most agree there is no free market in American health care, with the erosion beginning with the passage of Medicare in 1966 followed by more and more government interference in health care since. Thus the root of the problem is evident.

From Ement Klepper (gmail.com>):

I find the juxtaposition of this paragraph:

“Managed care organizations in collaboration with their provider partners have brought this on themselves. With egregious pricing fueled by secretive managed care contracts that guarantee price increases year after year, heretofore powerless consumers have had enough. With their financial backs to the wall, they simply cannot afford health insurance anymore and look to government for answers instead of the free market.”
and this one:
 
“Most agree there is no free market in American health care, with the erosion beginning with the passage of Medicare in 1966 followed by more and more government interference in health care since. Thus the root of the problem is evident.”
very telling. Somehow, “egregious pricing fueled by secretive managed care contracts” is the fault of the government.
If the “free market” could be relied upon to save those “powerless consumers, then why isn’t it the “free market” where they sought relief back in ’66, and why isn’t the “free market” where those consumers are turning now? Does the author think they are wrong to seek relief from the government instead of the market? Does the author think this behavior of consumers is unfair to those corporations? The author uses “government price controls” like some boogeyman, but doesn’t bother to mention why powerless consumers shouldn’t like them. Should they weep for the loss of the “right” to be forced to pay too much? Is that the type of freedom he thinks the founding fathers had in mind?
So I’m not really sure what the author’s real complaint is here. Is it that the government shouldn’t be stepping in, even when the free market fails? Is it a genuine serious argument that the government is solely responsible for all of the current excesses of the health insurance industry? Is it that current system untenable because of the actions of the government, but that if the government were to do the opposite of the action that caused this problem (in permitting these secretive managed care contracts), that would be equally unacceptable, or even worse? Or is this just another reflexive assertion that the government is always the bad guy and that the free market will always save us?
Otherwise, as inept as the government is, and as much of an aggravating factor as it may be, I don’t see how predatory corporate behavior is the fault of anyone but those behaving that way. The idea that “the root of the problem is evident” merely because the government is involved seems more like an ideological statement than a pragmatic one. It requires the assumption that any failure in the market must not be the fault of the market, but must be due to “interference” from the government. But medicare would never have gathered the momentum to pass in 1966 if there hadn’t been popular support for radical change and government involvement. If the market worked so well before 66 and the government got involved, then how did medicare ever manage to get passed in the first place, and why? If it wasn’t total market failure, then what was it? Librul conspiracy?

 

American healthcare is an incredibly complex system that developed over decades. There were government actors of all sorts of political persuasions from many different administrations involved, and there were (and are) powerful and monied corporations who have had huge impact over the shape of how things developed. Pretending like all our problems are the fault of one political persuasion within that one institutional player doesn’t really add anything to the conversation. More importantly, it doesn’t help us move forward towards our goals.

 

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