When doctors go Galt

What happens when government regulation makes it more expensive to bill for medical services than providers receive?  More and more, providers opt out of those systems like Medicare and Medicaid, and patients have to go out of pocket to see specialists.  And if you think that will change in universal health care, think again (via Instapundit)

Here’s something that has gotten lost in the drive to institute universal health insurance: Health insurance doesn’t automatically lead to health care. And with more and more doctors dropping out of one insurance plan or another, especially government plans, there is no guarantee that you will be able to see a physician no matter what coverage you have.

Consider that the Medicare Payment Advisory Commission reported in 2008 that 28% of Medicare beneficiaries looking for a primary care physician had trouble finding one, up from 24% the year before. The reasons are clear: A 2008 survey by the Texas Medical Association, for example, found that only 38% of primary-care doctors in Texas took new Medicare patients. The statistics are similar in New York state, where I practice medicine.

More and more of my fellow doctors are turning away Medicare patients because of the diminished reimbursements and the growing delay in payments. I’ve had several new Medicare patients come to my office in the last few months with multiple diseases and long lists of medications simply because their longtime provider — who they liked — abruptly stopped taking Medicare. One of the top mammographers in New York City works in my office building, but she no longer accepts Medicare and charges patients more than $300 cash for each procedure. I continue to send my elderly women patients downstairs for the test because she is so good, but no one is happy about paying.

The counterargument will be that the only solution to this is a single-payer health system, along the lines of Canada and “England”.  In a single-payer system, providers would be forced to accept all patients, since the payment source will be the same for each.  Prices will get controlled via Medicare-style diktats, so providers will have to settle for the compensation set in Washington or nothing at all.

That may control prices, but not costs, which is the entire disconnect in socialized systems in any industry.  Marc Siegel’s piece highlights the disconnect between prices and costs that occur in highly regulated and socialized systems, but not in free-market systems.  Medicare and Medicaid set prices without regard to the cost to bring services and products to market, making the transaction less desireable — and in some cases, actually damaging to the business.  In those cases, providers will withdraw from the market, leading to shortages and higher costs; in the medical field, those costs will eventually include unnecessary illnesses and deaths from lack of care.

This scenario is not academic.  The health systems in Canada and the UK have shortages of doctors, especially specialists like dentists, transplant surgeons, and the like, which is why it takes months to get testing and diagnosis even for serious illnesses.  Why?  It costs a lot of money to go through medical school and residencies for surgical specialties.  The limited amount of compensation for the work they do makes the debt burden of training too heavy.  Instead, more doctors stop at the general practice level, leaving artificial shortages in the specialties.  Others move overseas to nations without single-payer systems in order to ply their trade for a proper level of compensation.

If we want to create shortages of medical services here in the US, single-payer care is the way to go.  The red tape of Medicare and Medicaid is already creating such shortages among those patients the system is designed to help.

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