Don’t read this article.  Seriously.  If you are having trouble getting to sleep, read the whole thing.  If you want to know how silly writing about health care can be, read pages 5-7.  

The folks writing this stuff are believers in economic modeling.  The flaws in their assumptions are so glaring that they have to admit to many of them on their own.  The only conclusions they can draw are so obviousthat it’s a bit embarrassing.  For instance, if you pay doctors more to see Medicare patients, they will see more Medicare patients.  Duh.  

Austrian economists reject economic modeling.  This article is a great demonstration of why they do.  ”Ahh…but the Austrians do this out of laziness or because they lack the mathematical rigor!”  Go on telling yourself that.  I am reading Professor Robert Higgs’, “Crisis and Leviathan.”  He makes a point early in the book that economists drawing conclusions from bad econometric data, are like a drunk stumbling around under a street lamp looking for their car keys because the light is good there.  This article fits that perfectly.

What do they claim?  They claim that their model shows that if Medicare (you and me) pays primary care physicians more, they will see more Medicare patients and while that will run up the cost of the primary care physician component of Medicare, it will result in an overall savings due to the prevention of more expensive care as a result of the increased numbers of doctor office visits.  Saving Medicare money.  Making the system more efficient.  Readers of this blog know where I’m taking this, don’t you?

How about this?  If you want to save Medicare money, have the person requiring the care pay for it.  Why should you have to cancel your vacation to pay for someone else’s heart surgery?  Someone you don’t even know.  This is the essence of what is called moral hazard:  one benefits from another’s risk.  That is how Medicare works.  It represents what economists call a transfer payment, a payment from one individual to another, with Uncle Sam as the heavy handed go-between.  

Let the doctors charge whatever they want.  If they are too high, no one will see them.  If they are too low, they will not get home until late.  Some guys will be worth more than others.  Some will be able to charge very little due to the value proposition.  Do you see why increasing payment to primary care docs by 10% is a ludicrous policy?  Who knows what they should be paid.  I know a way to find out, and Medicare or think tanks like this are not part of the answer.

Tinkering with a failed socialist system like Medicare seems like such a waste of time.  Socialism doesn’t work.  It must be abandoned, not band-aided or tweeked.  The Austrians would say, “let the free market determine the market clearing price for office visits.”  Medicare wouldn’t have anything to say.  Medicare wouldn’t exist.  Articles like this that grant an unearned credibility to the Medicare system are a disservice to all of us.

G. Keith Smith, M.D.