Absolutely right. In the same way that insurance companies manage health care and medical professionals provide it, all that is left for Medicare and Medicaid to do is divide the pie as best they can. As far as I can determine, that already-in-place rationing of health care is the only feature of the current “system” aimed at limiting costs. For all the other players “rates” (different from “costs”) are whatever the market will bear.

Last week’s post by Paul Levy at THCB danced around the issue but never got to the meat of the problem. I tried to get in my two cents in the comments but I haven’t learned the right language (which I call the language of business in the marketplace) to be heard by those whose entire professional life has been invested in budgets, projections, and other clever permutations of that same model that they seem to have forgotten where the money actually comes from and how it must be managed.

In the case of health care, after the last sixty years only two revenue streams remain: insurance premiums and taxes. The day when patients actually paid their bills to the doctor (pre-1930’s) stated to vanish with the advent of the Blues, and since then private insurance and Medicare (the US single-payer) have left patients with the notion that they only need to chip in some token amount and someone else will pick up the rest. Today’s patients are like guests in a restaurant who eat a costly spread then act like they are being magnanimous when they say “Let me get part of that tip,” expecting the host to reply, “No. I’ll get it. You’re my guest.”

Something needs to happen to let patients and their families know that there is no free lunch. (And part of that message needs to be the end of “Doctor, do everything you can!”)

As for cost controls, it is certainly true that the AMA and physicians in general have opposed many of the things you outline. However, for some time, it has been the case that rates are set by Medicare and insurers and not by physicians. Almost all physicians are limited in compensation to rates set by payers (private insurers, health plans, Medicare and Medicaid). It really does not matter at all what the “charge” is on a bill, so you cannot go by that. All that matters is what is paid. In the case of Medicare, the national average is about 30% payment on billed charges. Medicaid is generally a little less. Over time private insurers have forced their payment schedules down to approach if not equal Medicare. This means that on average, physician payments overall range from 40-50% of billed charges. That is a pretty steep built in discount by any business definition. Hospital payment rates are in many cases even lower.

There are a number of reasons for “excessive” costs and I will address that soon, but suffice it to say that fingers can be pointed in many directions, including the public at large.

The Kaiser Family Foundation provides a ten-page PDF document comparing and summarizing the Senate and House versions of the health care reform proposals.

http://www.kff.org/healthreform/sidebyside.cfm

Do not believe anything you read or hear about this plan until you have done your own homework. The link is at the top of the screen, above the now obsolete plans that also appear below.

(I have not studied these two most recent permutations of the half-dozen or two that were introduced at the start of the session. My printer is not available at the moment, but when I finish leaving this link a few places I will go to the library where I can make myself a copy to study.)

Critics are probably correct that there is nothing in the proposals to control costs. There never has been from the 1930’s when Blue Cross and Blue Shield became the first group insurance plans in the country. The only way that they were permitted to come into existence was the understanding that there would not be any controls on physician charges. The country was recovering from price controls of the Great Depression and the AMA, which opposed both the Blues, only relented in return for an agreement that there be no caps on charges.

Nothing has changed since then, which is one of the main reasons for the excessive costs of health care today.