Evening Must-Read: Uwe Reinhardt: How the Medical Establishment Got the Treasury’s Keys

Uwe Reinhardt: How the Medical Establishment Got the Treasury’s Keys: “The proponents of Medicare… were anything but stupid….

Confronted by the health care sector with a harsh trade-off between their cherished vision for health care, on the one hand, and a sensible payment policy, on the other, they let their vision override economically sound payment policy. Millions upon millions of America’s senior citizens are indebted to them for a program that remains highly popular to this day. Younger leaders of medicine and the hospital industry would do well to recall this dubious social contract struck by their predecessors to appreciate that the countless amendments to Medicare and the ever-new regulations emanating from the program are just the byproduct of many skirmishes in a protracted and tenacious war over possession of the keys to the Treasury…. The fiercest generals in this war on the government’s side have been Republican stalwarts… Reagan and George H.W. Bush. Desperate over the ever-escalating costs of Medicare during the 1970s and ’80s, both presidents resorted to what has been described as a Soviet-style payment policy for Medicare: administered prices set by the central government for the whole country…. But the war over the keys to the Treasury will probably never be fully concluded…. In retrospect, it would have been better all around to cut a more rational deal from the outset.