NCPA - National Center for Policy Analysis

Do Medicare's Cost Controls Sometimes Backfire?

September 17, 1995

Medicare's current financial problems wouldn't be nearly so severe if it weren't for the program's disregard for quality care over the past 15 years. And rigid price controls have actually contributed to the rapid growth in Medicare by rationing health care and making patients sicker or prolonging their illnesses.

  • The system rewards the rapid discharge of patients, many of whom are not well enough, relapse and then must be readmitted.
  • Seniors hospitalized for depression ultimately required more care without additional benefit.
  • Medicare's regulations may increase by 50% chances patients will be sent home in an unstable condition.
  • A successful program to reduce postoperative infections could save $1 billion over a seven year period.
  • If Medicare were to adopt successful bedsore treatment programs, it could save taxpayers more than $7 billion a year.
  • Quality competition programs pioneered by private-sector companies promise substantial savings to tax payers if adopted by Medicare.

Source: Susan Horn and Robert Goldberg, "A Sickly Approach to Medicare," Washington Post, September 17, 1995.


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