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Do We Really Need Another Reminder About the Problems With Government Health Programs?

By August 25, 2009November 2nd, 2009Commentary

A subset of the Medicare program provides health care coverage for people who have end-stage renal disease.  A USA Today article chronicles the status of the program, including its ongoing problems.   (USA Today article)  The program has been a success in ensuring that all Americans, regardless of income, who have this brutal disease, can get appropriate treatment.   There are, of course, questions about the ongoing cost, which, no surprise, have been higher than projected.  There is also concern about the quality of care received by patients covered by the program.  The nature of that care is substantially influenced by Medicare’s payment policies.

There are several lessons.  Some relate to costs.  The cost of this program to taxpayers could be reduced if it did not cover everyone at basically no cost.  People who can afford to pay for their own health care or health care coverage could be asked to do so as opposed to using public funds.  This might create more cost awareness and sensitivity.  When government pays, providers tend to respond to whatever incentives are created by the government payment mechanism to maximize their income, whether the resulting care is the best for patients or not.  In addition to cost lessons, we can infer that Medicare and its offshoots dampen both choice and innovation.  People are locked into certain care processes by CMS’ rules, for example, only paying for dialysis a certain number of times a week or for a certain number of hours a session.  This limits patients’ choice and it inhibits the search for potentially new or better ways of meeting patients’ medical needs.  All large organizations, public or private, likely share these characteristics.  But private institutions must generally respond to market forces; changing government programs is a political process which moves slowly and irrationally, driven by non-market forces, and the outcome does not always reflect patients’ or taxpayers’ best interests.

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