NCPA - National Center for Policy Analysis


January 29, 2009

The federal government seems to always be in a hurry to dole out pork, but it has problems reimbursing doctors who see Medicare patients, says Investor's Business Daily (IBD).

Payments have been so late in some cases that doctors from New York to California have had little choice but to take out loans -- some as large as $3 million -- to bridge the gap.  The late payments, which can be over $100,000, are only part of the problem for doctors.  In too many instances, the compensation that is eventually provided by Medicare -- an amount determined by bureaucrats, not the market, and is therefore subject to error -- is simply not enough to cover the physicians' costs.

The trend toward late and below-cost reimbursements creates trouble at two levels, says IBD:

  • First, some doctors are cutting back on the number of Medicare patients they see — limiting medical care access for the elderly who rely on Medicare and have paid into it for 40 years or more; still others found that they have had to lay off staff and trim their own salaries to continue their practices.
  • Second, the arrangement kills incentives for medical school students to practice family medicine, which already seems to be a dying art, as only 8 percent of 2006 U.S. medical school graduates opted for family practices; that's about half the number of graduates who were choosing to go into family practice in the early 1990s.

Already Medicare's Hospital Insurance is paying out more in benefits than it takes in from tax revenues.  By next year, outlays for the entire program will exceed income. The Hospital Insurance Trust Fund will be exhausted by 2019.

System trustees estimate that over the long term, Medicare will have $36 trillion in obligations that aren't funded under the current setup. That, according to analysts at the Heritage Foundation, means "every American household's share of Medicare's unfunded obligation is like a $320,000 IOU."

If Washington can't run a program for 44.1 million people without bankrupting the nation, how can it possibly operate a national health care system for more than 300 million?

Source: Editorial, "A Health Care Model For Failure," Investor's Business Daily, January 28, 2009.


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