NCPA - National Center for Policy Analysis

Following the Money, Doctors Ration Care

December 14, 2010

Unequal access to health care is hardly a new phenomenon in the United States, but the country is moving toward rationing on a scale that is unprecedented here, says Tyler Cowen, a professor of economics at George Mason University.

The underlying problem is that doctors are reimbursed at different rates, depending on whether they see a patient with private insurance, Medicare or Medicaid.  As demand increases relative to supply, many doctors are likely to turn away patients whose coverage would pay the lower rates.

Let's see how this works.

  • Medicare is the major federal health program for the elderly, who vote at high rates and are politically influential, and so it is relatively well financed.
  • Medicaid, which serves poorer people, is paid for partly by state governments, and the poor have less political clout than the elderly, so it is less well financed.
  • Depending on the state and on the malady, it is common for Medicaid to reimburse at only 40 percent to 80 percent the rate of Medicare.
  • Private insurance pays more than either.

A result is that physicians often make Medicaid patients wait or refuse to see them altogether.  Medicare patients are also beginning to face lines, as doctors increasingly prefer patients with private insurance, says Cowen.

Access to health care will become problematic, and not only because the population is aging and demand is rising.  Unfortunately, the new health care legislation is likely to speed this process.  Under the new law, tens of millions of additional Americans will receive coverage, through Medicaid or private insurance.  The new recipients of private insurance will gain the most, but people previously covered through Medicaid will lose.

Source: Tyler Cowen, "Following the Money, Doctors Ration Care," New York Times, December 11, 2010.

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