Following the Money, Doctors Ration Care

by Tyler Cowen

Unequal access to health care is hardly a new phenomenon in the United States, but the country is moving toward rationing on a scale that is unprecedented here. Wealthy people will always be able to buy most of what they want. But for everyone else, if we stay on the current course, the lines are likely to get longer and longer.

The underlying problem is that doctors are reimbursed at different rates, depending on whether they see a patient with private insurance, Medicare or Medicaid. As demand increases relative to supply, many doctors are likely to turn away patients whose coverage would pay the lower rates.

Let’s see how this works. Medicare is the major federal health program for the elderly, who vote at high rates and are politically influential, and so it is relatively well financed. Medicaid, which serves poorer people, is paid for partly by state governments, and the poor have less political clout than the elderly, so it is less well financed. Depending on the state and on the malady, it is common for Medicaid to reimburse at only 40 percent to 80 percent the rate of Medicare. Private insurance pays more than either.

A result is that physicians often make Medicaid patients wait or refuse to see them altogether. Medicare patients are also beginning to face lines, as doctors increasingly prefer patients with private insurance.

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