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Reflections on the Insanity of the Medicare Payment System
By: John R. Graham
12.10.2010
Over at the John Goodman Health Policy Blog, Dr. Goodman and Prof. Reinhardt (amongst others) are debating how Medicare pays people. Here's my take: It is insane. Suppose that in 1965, the federal government observed that great advances were taking place in aircraft design and manufacturing. In order to ensure that Americans were able to take advantage of this, the government legislated “Aircare.”
Flash forward to 2010: “Aircare” pays for our ariplane tickets. It pays the airlines themselves under “Aircare Part A” and the pilots and co-pilots under “Aircare Part B”. It pays claims under Aircare Part A by a “Prospective Payment System” based on “Distance-Related Groups” (DRGs). The DRGS are calculated for non-labor and labor (adjusted for cost-of-living) costs. Etc., etc. Read the entire post here.
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