The NYT demonstrates, once again, that journalists should be required to take basic economics before being allowed near a keyboard. Here is Sheryl Gay Stolberg, in a piece about Democrat angst over the cost of health care “reform,” providing what she imagines is a list of cost control alternatives:
There are a variety of ideas for attacking cost increases more aggressively, including setting Medicare reimbursement rates for doctors and hospitals more rigorously and discouraging workers and employers from buying expensive health insurance policies that mask the true costs of treatment.
Someone needs to tell Stolberg that these ”ideas” do not address costs at all. Had she been through at least one economics course, she would realize that “setting Medicare reimbursement rates” is a standard bureaucratic tactic known as “imposing price controls.”
Price controls never (ever) work because they are aimed at the symptoms of a given economic condition rather than its underlying causes. Artifical price ceilings simply create shortages. In fact, Medicare price controls for physicians are the direct cause of the current PCP shortage.
Were Stolberg literate in the economics of health care, she would also know that Medicare has been “rigorously” setting reimbursement rates for nearly three decades, and that this ”idea” has been a spectacular failure. Medicare cost increases have far outstripped the CPI.
One of the reasons progressives, and other benighted souls who get their “information” from the New York Times, are so clueless about health reform is that the Gray Lady employs profoundly ignorant (or, in the case of Krugman, dishonest) writers.
[HT Just One Minute]
UPDATE:
John Goodman links to another seriously dopey NYT piece on health reform by Robert Frank, who asks why “the Mayo model” of physician payment hasn’t taken hold in the health care market. The Mayo Clinic has its doctors on salary and, by all accounts, delivers better and cheaper care than the traditional fee-for-service model.
In answer to his own question, Frank produces all manner of shopworn talking points, including the tired “greedy doctor” meme. He also theorizes that there may be “residual prejudice” against HMOs. The scary thing here is that Frank is an actual economist yet misses the obvious answer, which Goodman provides:
Medicare punishes Mayo for supplying low-cost, high-quality care and rewards other hospitals for doing the opposite and private payers have been pushed to pay the same way Medicare pays.
On other words, the thing preventing the “the Mayo model” from working is precisely what Frank’s op-ed piece enthusiastically endorses—-government meddling in the market. Intelligent readers seeking informed, honest commentary about health care economics and reform really should avoid the Gray Lady.
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