Keep it Simple Stupid: But Not With Medicare

August 12, 2011
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In today’s Wall Street Journal, John Goodman, National Center for Policy Analysis CEO suggests, Three Simple Ways Medicare Can Save Money. I only wish. His overarching plan is to “allow medical fees to be determined the way prices are determined everywhere else in our economy –in the marketplace.” His three specific starting points are:

In today’s Wall Street Journal, John Goodman, National Center for Policy Analysis CEO suggests, Three Simple Ways Medicare Can Save Money. I only wish. His overarching plan is to “allow medical fees to be determined the way prices are determined everywhere else in our economy –in the marketplace.” His three specific starting points are:

  • “Free-standing emergency care clinics that post prices and usually deliver high-quality care”
  • TelaDoc –telephonic conversations with doctors
  • Concierge physician practices

His argument is that these services are typically delivered outside of the health insurance system and so have their prices set by the market, rather than Medicare. He proposes having Medicare allow patients to use these services and suggests having Medicare pay the posted prices.

Not to be negative but these proposals wouldn’t work at all:

  • When Medicare adds services, it tends to increase costs, not reduce them. Case in point: it’s cheaper for Medicare to pay for home care than to pay for someone to be in the hospital who can’t go home and take care of himself. But add a home care benefit to Medicare and suddenly everybody opens a home care operation and finds ways to bill Medicare. Do the hospitals get less crowded? No.
  • Free standing emergency rooms are huge drains on payers, so much so that purchasers and health plans in some parts of the country (like the Northwest) have gone to great lengths to try to keep these facilities from opening up. Goodman probably means urgent care clinics or in-store clinics, which struggle to make a living and rely on insurance payments
  • Concierge services are pricey, and encouraging doctors to go into these practices dramatically reduces the availability of primary care for regular patients

In sum, Goodman’s idea would all add to the cost of Medicare. They wouldn’t do anything to reduce costs. And they certainly offer no solution to the misaligned incentives of third-party payment and overutilization.

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