Paying for Doctors

Economic literacy is important. It is even more important when you cover one of the most controversial issues for the state’s leading newspaper. Winthrop Quigley covers health care for the Albuquerque Journal and while I don’t have a major problem with his reporting, a recent column (subscription required) of his stood out for its being based on a erroneous assumption.
Tthe headline — which Quigley probably did not write — provides a good summary of the article and my problem with it, “How we pay the doctor just coudn’t matter less.” This is simply absurd. How we pay doctors is actually the key to health care reform. If patients pay their doctors, then patients are viewed as the customer and will be treated as such. If it is insurance companies acting as the agent for employers or the government that has the relationship with doctors and ultimately pays them, then the doctors will respond to insurance companies or the government.
Quigley does point out in the article the problems associated with what he calls “health care’s 19th century business model” and he notes the very real problems posed by a single-payer system, but his argument that how we pay for health care is irrelevant does not hold water.
The fact is that government regulations and cost-shifting have contributed greatly to the inefficiencies and lack of responsiveness we see in today’s health care system. Giving individuals the same tax deduction now given to their employers would be a step in the right direction. So would allowing individuals to shop for health insurance across state lines as a means of avoiding state mandates that drive costs up significantly. Congressional action on market-based Medicaid and Medicare reforms would also help matters a great deal by limiting the problem of cost-shifting from Medicare and Medicaid users and on to paying customers.

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