I don't often weigh into health care issues on this blog because I don't understand the subject well enough. Sometimes I get the sense that bloggers who do write frequently on the subject also don't understand it well enough to offer any real informed commentary. As a test case I sent the following paragraph from this post by the American Prospect's self-styled health care guru Ezra Klein to a genuine health care expert (this one over the age of 25) who prefers to remain anonymous. Klein's overall post is an attack on GOP Rep. Paul Ryan, who Klein says is embracing "health care rationing" in order to bring down costs:
So how does Ryan control costs? Well, pretty much the same way. He turns Medicare into a voucher program where seniors "will receive a premium support payment equal to 100 percent of the Medicare benefit." Currently, Medicare's costs rise as the demand, and price, of care rises. No rationing. Under Ryan's proposal, its costs will rise by whatever the federal government says its costs will rise by. The question will simply be how quickly the subsidy grows. And if subsidy growth slows, we'll have...Rationing! It will take the form of individuals being unable to pay for treatments rather than the government making people wait for treatments, but it'll largely be the same thing. And it's nearly the exact same mechanism.
Our expert responds:
Ezra, that is not quite the way Medicare works.
Currently Medicare does have a mechanism to control costs. It is called the SGR or sustainable growth rate and it decrees how much Medicare will pay physicians per unit of work (Medicare pays docs using a relative value scale- each clinical activity has a quantity of RVU's attached to it. One RVU is worth $36.0666). Federal law requires Medicare payments to physicians to be modified annually using the SGR. The formula has mandated physician fee cuts almost every year for the past decade. Only short-term congressional fixes have averted these cuts. Absent additional, long-term congressional action, the SGR will continue to mandate physician fee cuts for the unforeseeable future. In fact, in July 2008 it took Congress overriding President Bush's veto of House Resolution 6631, the Medicare Improvements for Patients and Providers Act of 2008 to stop a huge cut of 10.6-percent. So rationing by cost is built into the current Medicare system. It takes an act of Congress to change it.
As President Obama recently said, these days everyone thinks they are an economist. Perhaps he should say everyone or every blogger thinks they are a health care economist. To control costs you have to control costs. If you do not want the European system of socialized medical care, you have only 2 choices to control costs: Restrict access or pay less. Actually every other country does both. The only question is how you do it. President Obama proposes to pay by an episode of care system. In this way, a heart attack, for example, would generate a set fee for the care no matter how many tests were ordered or how many visits were made by the physician or how many days in the hospital ICU. That would give every physician an incentive to see patients less and to provide less care. Not that a good doctor would do that but the whole point is that you cannot reduce the cost of medical care by an electronic medical record, by universal coverage, by pay for performance or by any other approach than reducing how much care is given or how much one pays for care.
Klein should have bounced this one off some of the "experts" on the Journolist.
