Medicare Fee Schedule Deadline Approaching, Again.

I previously discussed how the planned -21.2% update to the Medicare Part B (physician’s fee schedule) had been put off for two months.  That time is approaching again.  It appears that some sort of temporary freeze will be applied again.  I have heard of a freeze until October 2010, and have also seen a proposal for a ten-year freeze

A ten-year freeze makes little economic sense, and may serve only to place a large gauze wrap on the issue (as opposed to small band-aids), until a real solution can be developed.  The fee-schedule problem is an ongoing issue, and the ever-increasing proposed cuts are reaching levels that make no sense.  Congress knows this, and has only implemented the cut once, in 2002.  It is noted that there was not a large-scale provider dropout from Medicare, which is always mentioned by physician groups when lobbying against the proposed cuts.

What is missing from these periodic debates is a voice asking “Why in America, a nation which has benefited so greatly from capitalism and free-enterprise, do we have one-sixth of our economy operating under a system of administered prices?”

The last few years have certainly not been capitalism’s greatest moment, and providers have other considerations than economic reward.  But the cost explosion in healthcare is a very complex problem with a significant (and conceptually simple) contributing factor; the people who purchase care are rarely the people who consume it.  Combined with a system of arbitrary price schedules, there should be little surprise that our system has led to ever-increasing costs without correspondingly increased efficiencies. 

The system will eventually improve.  Healthcare is not going to be allowed to swallow our entire economy.  The forces that will keep it in check are already underway, although it will be a rough ride while these adjustments take place.


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