Thursday, August 16, 2012

- Obama's Medicare Cuts

You've likely been hearing about Obama's Medicare cuts that he swears aren't taking place and that everyone else except his surrogates and the MSNBC folks are calling 'a fact'. Let me see if I can explain.

What Obama has done is he's fixed the prices paid for services by Medicare at a new lower price. So instead of Medicare paying (as a totally fictitious example) $1,000 for an appendectomy, Obama's team has set that price paid at $600. He's calling the result a 'savings' and proclaiming it a great victory for the people. In reality, like most price fixing it isn't actually going to solve the problem.

The actual problem is, Obama has only fixed the price. And if it costs doctors $700 to take out that appendix that they used to get $1,000 for but now only get $600, then the appendix is going to have to stay exactly where it is. Price fixing results in shortages 100% of the time. It doesn't matter if you call the lower price a 'savings' or not. But the left has never worried about such ugly and unfortunate consequences and they aren't going to start now.

The right, meanwhile, is looking at this 'savings' that Obama has proclaimed and saying, "Wait a minute, if people can't get the service anymore then what you've done is actually 'cut' Medicare right? I mean, if you took the money away from the patients then that would be a cut and they wouldn't get any care. How is it different if you leave some of the money but take away all the doctors and hospitals? Why isn't that a cut?" "No no!" says team Obama in their childish and singular way "that's the 'SAVINGS'. If those greedy doctors, hospitals, drug and insurance companies don't want to provide the service anymore, we certainly can't be blamed for that!"

Of course, they can and should be blamed to for that, but with their pre-adolescent world view, it's impossible to explain to them why. In a way it's a lot like how the community reinvestment act caused the mortgage blowup. Banks were ordered to make loans to people who didn't deserve it based on their credit score because they were minorities. The banks collateralized the bad loans along with insurance to keep from going broke on them, which made them popular with investors. That made the problem seem like it was less bad than it really was, allowing the whole market to expand into a bubble which eventually popped all at once.

This is the same sort of thing. Team Obama cuts the price for Medicare service. Rather than go broke at the lower price paid, the medical industry simply refuses to take Medicare. Medicare patients end up with no doctors unless they're prepared to pay with cash. It's really just simple cause and effect. There's nothing so complicated about it that it can't be understood by your average high school senior.

But as usual, you can't tell liberals that because they do not recognize that the world responds to the incentives that they create. To them it's all the fault of greed, and cruelty and evil rich guy's who light their cigars with $100 bills. It's as if the liberals were all still 10 years old.

In the end though it's really our own fault. This is what you get when you let your government be run by power hungry losers and dimwits.


ikaika said...

Excellent observation.
I'm linking this

Chess said...

I lived it for 30 years and about sums it up on one page..Internists and FP's have cut back and will cut back more on medicaid/care patients.For the average (old and sick as shit) open heart I would make about 80-100$$ an hour.Then you carried a beeper 24/7 in case of bringing that pt back for whatever reason. Medicare sometimes would say thats all part of the 1st payment and you got zip for that bring back at 2 am. then you paid office. Malpractice etc.And dont forget that every patient literally could bankrupt you in a legal hanging.
So I quit at 50.If BHO gets re elected you will see lots of late 50s and 60s quit like I did. Its not worth it.
0 was done on any tort reform.I think BHO is counting on fomo and he will mandate that every doc has to take these pts or Eric will have your ass.So if mandated then they will quit.

There already will be a 20,000 shortfall of docs by 2020..Yes 2020. So you will get your healthcare from a nurse at Walgreens..