Tort reform does little to improve healthcare resources utilization and costs. That is the false narrative from the right. The false narrative from the left is that M4A would save money by reducing executive and administrative costs.
The truth is that the real crisis in healthcare is one of increasing costs which in turn leads to under insurance. Increased costs are driven by 2 factors: 1) an elaborate system of rent and price control imposed by government regulation that stifle competition and market forces that would normally contain prices, and 2) rampant consumption of high-cost technology by US healthcare consumers.
The idea of rent controls is not going to be popular on this forum but occurs when Medicare sets reimbursement rates for providers and institutions that serve as a basis for other 3rd party payers. That basis is always increasing and disproportionately exposed to artificial inflation from special interests. When was the last time a physician, hospital, or pharma lobbied to cut Medicare reimbursements? Rent controls are also seen in Medicare D price setting and regulations that limit the labor pool of healthcare providers (personnel and facilities such as licensing, CONs, etc).
On the other hand price controls are seen in Medicaid and Medicare when providers can not recover the full costs of their services and must pass on those costs to patients with private insurance. This is known as cost sharing and is a big reason why those with insurance pay huge deductibles and co-pays despite massive premiums.
Consumption of expensive technology is what it is. American patients and doctors love to get expensive tests at much higher rates than other developed nations. Moreover, the rent control phenomenon is at play here too as regulations require the turnover of technology at rates not seen in other industries. For example, try to find a 64-slice CT scanner to get a cheaper rate for a patient - they don’t exists. You are always required to use that latest and most expensive technology.
So, expansion of Medicare would likely exacerbate the rent and price control market distortions, and may even worsen our technology consumption issue. I have no expectations that a reduction in administrative costs could offset those distortions.
www.telegraph.co.uk
