Cars are just too expensive for seniors, proclaimed the politician when he
unveiled his new plan. The bill passed, and so the government collected
money from every worker’s paycheck to buy the cars, then paid the dealers
about 20 percent of the market prices.
Soon every senior had a car through the government program cleverly called
“AutoCare.” But there were some problems. First, the showrooms of some
dealers were cleaned out as seniors clamored for luxury cars for the
government’s bargain-basement payments. Some dealers were run out of
business because they had to sell so many pricey cars at a loss.
It just got worse for everyone when cars became more expensive because
seniors demanded better and more extravagant cars. When there was a
shortage of cars, seniors tried to buy cars on their own with their own
money. But the government said that was illegal, and threw the dealers in
jail. Federal agents mobilized seniors to rat out dealers who told the
government the car was blue, when really it was green-blue.
The final straw was the rebellion of the younger citizens when they found
out they were paying for seniors’ new Broncos when they were still driving
Seem ridiculous? Just substitute Medicare for AutoCare, doctors for dealers
and you get the picture.
When Medicare started in 1967, many people were initially pleased with it
because the government obligated itself to pay for most medical spending
for most Americans over age 65.
But the country responded to Medicare in the same way as our mythical
citizens did to AutoCare. Many Medicare patients could now seek more highly
trained specialists and better hospitals. But these services and facilities
were also more expensive.
One reason demand escalated was because many patients used the system as
designed. The grandmother of a friend of ours was a very frugal woman who
rarely saw the doctor — until Medicare was created. Then, because Medicare
covered one doctor visit every month, she saw her doctor every month
thereafter. After all, frugality involves using resources to their utmost.
Soon Medicare spending projections were off by 1,000 percent. The
planners had not adequately appreciated many factors, such as increased
demand for more and higher quality services from patients, with resulting
inflationary pressure on medical prices. If the AutoCare program had
started in 1967, the average automobile would now have a list price of
When the politicians were called on to come up with more money for
Medicare, they cried foul and looked for a scapegoat for their budgeting
folly. Somebody or some group had to be found to take the blame. As there
aren’t as many doctor-voters as there are Medicare-voters or even
government-bureaucrat voters, the politicians turned up the heat on the
In 1996, Congress criminalized unintentional clerical billing errors made
by Medicare providers. Many capable and honest doctors have been victimized by
government prosecutors because of this flawed approach. Yes, many criminals
have been caught, but at least as many honest doctors have been driven from
practice, retired early, been financially ruined or even jailed because of
Yet, Medicare invites fraud. Unlike credit card or other bills, the patient
may never see what Medicare really pays or be unable to comprehend a
hospital billing when a copy is presented. And, if government pays most all
of the charges anyway, why bother trying to figure it out?
The current effort to ferret out fraud and abuse has had unintended
consequences. For example, a number of surveys show about one-fourth of
doctors are refusing to accept new Medicare patients. One shows that the
leading reason is hassles or threats from the government. The amount of the
physician fees was a distant fourth.
This survey demonstrates that medical care to Medicare patients is
government-rationed by the hassle factor. If the government really wants to
save money rather than prosecuting doctors, why not require the patient to
endorse the Medicare check or even send the payment check and explanation
straight to the patients. If the patients were to pay the doctor directly, fraud would be virtually eliminated.
Yet government is so intent on control that Medicare also makes it
impossible for doctors to provide additional paid care to requesting
patients or even free medical care under threat of criminal prosecution and
jail time. In 1995, the Association of American Physicians and Surgeons
marked the first “Medicare Patient Freedom Day” by treating patients for $1
cash, while refusing to file claims for reimbursement from taxpayers. The
government responded by saying it was illegal not to file a claim for
payment. Jane Orient, M.D., warns, “Doctors should refuse to be willing
participants in this game of regulatory Russian roulette.”
Not to belabor the point, but we think a system is bizarre when it
allocates one billion dollars to lawyers and investigators to search out and destroy
fraud, while paying dimes on the dollar to the true providers of senior care.
Might not the government be the entity that is guilty of the real fraud!
Thoughts on Medicare reform divide roughly into two camps, one believing that
government should do as much as possible, and the other that government
should do as little as possible.
Medicare patients should have greater freedom to choose their doctor. But
the current bureaucratic system discourages many fine physicians who would
rather be taking care of patients than spending time trying to comply with the
enormously complicated and often undefined Medicare regulations.
When doctors spend an average of 500 hours — and some many more — per
year dealing with Medicare, that’s a lot of time that would be better spent
treating patients. Until doctors are freed of the regulatory burdens,
patients are allowed the choice to electively pay more for additional
health-care, and Congress removes the incentives
to cheat the system, nothing much will change.
We also hope that the American flair for fairness will reassert itself.
It’s unfair to ask poor young workers supporting a growing family (and perhaps even their
own parents) to support those senior citizens who can afford care.
When asked why he robbed banks, Willie Sutton answered because that’s where
the money is. While no one would dare accuse Medicare patients of robbery,
that fact remains that Medicare is where the money is. As long as we think
of Medicare as an unlimited entitlement, the question may not be how to fix
Medicare, but can Medicare be fixed at all?
Now that Medicare has grown older and the baby boomers are coming of age
maybe Medicare should take an early retirement. Perhaps Medicare should