Medicare typically pays doctors and hospitals at lower rates than private payers. Doesn’t that mean that the government is better at cost control than private payers?
Background Information
Debate Question:This is what a short summary question would look like.
Medicare pays lower rates to doctors and hospitals than do private insurers in most regions of the country. Medicare doesn’t negotiate but rather sets rates that providers can either accept or decline. If they decline, they will get no reimbursement for treating Medicare patients. Many providers need Medicare patients to meet their revenue needs and thus accept the government’s rates.
in favor
against
In most regions, Medicare is able to set lower rates for hospital and doctors services than private insurers can get.
Zetema Panelist In Favor
+1 Good Point
Medicare gets lower prices but doesn’t have the staffing or the skill to manage the care delivered. Thus there are few controls on how many services are provided or whether they are appropriate for each patient’s situation. So even if Medicare rates are lower, that often doesn’t translate into lower overall costs.
Zetema Panelist Against
Good Point+1
Some economists believe that the main reason the US has high healthcare costs is due to the high prices that doctors and hospitals charge. Medicare clearly manages this better than private insurers do.
Zetema Panelist In Favor
+1 Good Point
Total cost is based on both the prices and the amounts of services delivered. Medicare can’t manage service volume nearly as well as the private sector can, so total costs aren’t lower under Medicare.
Zetema Panelist Against
Good Point+1
Congress can use Medicare to enforce policies that limit cost increases.
Zetema Panelist In Favor
+1 Good Point
This was tried in the 1990s with the Sustainable Growth Rate, which said that if physician total costs grew too fast one year the payment rates (prices) automatically would be cut the next year. Costs rose more than allowed, but Congress kept delaying the rate cut. After 25 years of exceptions, Congress scrapped the law entirely, showing that the government can’t make hard choices to keep costs down.
Zetema Panelist Against
Good Point+1
When Medicare introduced the Prospective Payment System for hospitals, costs for hospital stays dropped substantially.
Zetema Panelist In Favor
+1 Good Point
Hospitals discharged patients faster, lowering costs per admission, but many of these patients were released too early and returned to the hospital, reducing the cost savings.
Medicare typically pays doctors and hospitals at lower rates than private payers. Doesn’t that mean that the government is better at cost control than private payers?
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